Anthem's 29 percent earnings increase boosted by MA market

Anthem on Wednesday reported net income of $960 million for the third quarter, a 29 percent increase over the prior year being driven, in part, by gains in the Medicare Advantage market.

Anthem's 2019 Medicare Advantage offerings position the company for mid-double-digit growth and stable margins, Anthem President and CEO Gail K. Boudreaux said.

WHY THIS MATTERS

Anthem, and other insurers, have found success in the Medicare Advantage business. The number of senior citizens is growing and the percent of those choosing a private plan over traditional Medicare is increasing to more than a third of all Medicare members.

The MA market has been helped by the Centers for Medicare and Medicaid Services, which touted its benefits ahead of open enrollment in mid-October, and earlier this week added telehealth from home as a reimbursable benefit for MA plans, but not for traditional Medicare.

Anthem's MA plan design features competitive medical and pharmacy benefits and includes significant enhancements to ancillary benefits designed to address whole person care, Boudreaux said.

Operating gain in the government business segment was $466 million in the third quarter of 2018, an increase of $9 million, or 2 percent, from $457 million in the third quarter of 2017. The increase is partially due to the acquisitions of HealthSun in Florida and America's 1st Choice in South Carolina. Both increase Anthem's MA market share.

MA also benefits from Anthem's collaboration with Walmart for over-the-counter drugs.

THE TREND

Anthem is looking to grow membership in Medicaid in 2019.

Medicaid growth of an additional 365,000 members is expected in December when Anthem goes live in its partnership with Blue Cross and Blue Shield of Minnesota. In addition, Virginia's Medicaid expansion is on track for early 2019, adding an estimated 400,000 eligible individuals.

For this quarter, Anthem reported declines in its Medicaid business enrollment.

Enrollment last year declined by 753,000 members partially due to a reduced footprint in the Affordable Care Act market. This was partially offset by enrollment growth of 267,000 in Medicare.

The company's total enrollment is about 39.5 million.

WHAT ELSE YOU NEED TO KNOW

In 2020, Anthem said it expects to save an estimated $4 billion annually in gross pharmacy savings after the launch of pharmacy benefit manager, IngenioRx, on January 1, 2020.

Operating revenue increases of 4 percent reflect premium increases, Anthem said.

ON THE RECORD

"Our collaboration with Walmart, launching in January of 2019, gives our Medicare Advantage member the flexibility to use their over-the-counter plan allowances to purchase medications and health-related items from Walmart's 4,700 stores and online," Boudreaux said. "Today, more than 90 percent of Americans live within 10 miles of a Walmart store, and our partnership demonstrates our commitment to driving convenient, affordable access to healthcare for our seniors."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com