Anthem’s Focus On Medicare Over Obamacare Boosts Profits

Anthem’s decision to exit some individual markets under the Affordable Care Act in favor of growing its Medicare business helped boost profits in the health insurer’s second quarter.

Anthem chief executive Gail Boudreaux said the company plans to invest more in operations and acquisitions in the Medicare Advantage business, which has helped offset the loss of medical members. In the second quarter, Anthem added 254,000 Medicare members thanks in part to acquisitions the company made in south Florida, a lucrative market for Medicare Advantage plans.

“We have really reconstructed our MA book of business,” Boudreaux told analysts on a call Wednesday morning. “We think the market is strong. We feel we can grow deeper in the markets we are in.”

Anthem’s decision to join rivals like Aetna, Humana and UnitedHealth Group in exited the Obamacare business contributed to an 888,000-member drop in the company’s total enrollment, which stood at 39.5 million at the end of the second quarter. That compares 40.3 million in the second quarter of last year.

The shift from Obamacare helped Anthem increase profits by 23% to $1 billion , or $3.98 per share, compared to $855 million, or $3.16 per share, in the year ago period. Revenues were up 2% to $21.2 billion.

In the second quarter, Anthem’s individual enrollment dropped 60% to 712,000 from 1.78 million in 2017. That business, which includes Obamacare, is more profitable and insurers across the country are expanding into new markets.

Boudreaux said Anthem doesn’t plan a large Obamacare expansion. Anthem operates Blue Cross and Blue Shield plans in 14 states.

But Anthem may expand into some counties where the insurer continues to sell coverage under the ACA . “We are not looking to re-scale the business but we are very pleased with the participation we’ve had this year,” Boudreaux said.


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