Here is what you’ll find in this week’s newsletter!

1. Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.

2. Deep Dive 📚 - Q3 2024 Medicare Carrier Financials Side-By-Side 🍂

3. Sponsor Snapshot 🚀 - brought to you by Adsync Media

4. Compliance Chatter 📢 - New CMS final rules!

It’s only a 5 minute read, but it will make you 10x smarter.

DEEP DIVE 📚

Q3 2024 Medicare Carrier Financials Side-By-Side 🍂

In this week’s deep dive, we are looking at publicly traded Medicare carrier Q3 2024 financials side-by-side.

As we often talk about, the Medicare market is a growing market. So, the long term underlying market remains strong for these companies.

The insurance carriers included in this analysis are all trying to capture a piece of the growing Medicare market (along with other insurance markets), and do so profitably. Here they are:

• UnitedHealth Group (“UNH”)

• Elevance Health (“ELV”)

• Centene Corp. (“CNC”)

• Humana (“HUM”)

• Molina (“MOH”)

• CVS (“CVS”)

• Cigna (“CI”)

Aside from Centene and Molina, these carriers have both health insurance operations and healthcare services operations (providers, PBMs, pharmacies, etc.).

Here is the split of Q3 2024 revenues between these two segments for each carrier:

As you can see, UNH, ELV and HUM have a larger insurance segment while CVS and CI have a larger services segment (CI had notable movement from 25% insurance in Q3 2023 to 20% in Q3 2024).

Income Statement & Membership Side-By-Side

To compare and contrast the Q3 2024 results for each carrier, the Income Statement is split between “Insurance Operations” and “Healthcare Service Operations”. The consolidated statement is also displayed.

One Note: Healthcare Service Operations is different for each carrier, but generally includes providers, pharmacies, PBMs, and technology.

YoY % Change

Here is the % change in key metrics from Q3 2023 to Q3 2024.

Current Valuation Metrics

Here are current valuation metrics for these carriers.

Higher Loss Ratios / Lower Profits / Crazy AEP

The overall theme for the quarter was lower profits driven by higher loss ratios.

The higher loss ratios are a function of lower Medicare Advantage funding combined with higher utilization along with high Medicaid loss ratios.

The result of the tough environment is already being seen this AEP.

7% of current MA enrollees are losing coverage Jan. 1, 2025 due to plan terminations and service area reductions.

Additionally, overall MA Deductibles and MOOPs have increased for 2025.

Most recently, several companies announced they are making some of their MA plans non-commissionable right in the middle of AEP.

Observations

Membership

• Overall Medicare Advantage grew 6% combined

• CVS & MOH both saw significant growth in Medicare Advantage Membership (see more on Aetna’s big AEP here). MOH’s growth due to acquiring Bright Health members.

• Overall Medicaid membership dropped significantly (likely due to Medicaid “unwinding”)

• Medicare Supplement flat.

• Commercial grew overall and saw market share shift between carriers (due to growth in ACA market, and Humana exiting the Employer Group market)

Insurance Operations

• Overall, Revenues Up (10%), Operating Profit Down (30%)

• The profit/loss change varies significantly between carriers (CI & MOH up 30%, CVS down 210%)

• As previously mentioned, overall loss ratios were up 3.6% combined! (this is a huge change)

• Everyone saw an increase in MLR, though CVS was the clear outlier this quarter.

Healthcare Services Operations

• Overall, Revenues Up (13%), Operating Profit Up (6%)

• Mixed bag across companies, UNH and ELV with the best results

• The diverging operating profits between insurance operations (profit down), and healthcare services operations (profit up), is the business case for vertical integration.

Consolidated Results

• Revenues Up (12%), Profits Down (17%)

• Profit Margins down for everyone except MOH

That’s it for this week. I hope you enjoyed!

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Sources: Carrier quarterly financial earnings releases, 10-Qs and 10-Ks.

If you’re ready, here are some ways we can help you:

• Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)

• Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)

• Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)