Centene Expects Covid-19 to Lower Medical Costs This Year
(Bloomberg) -- Health insurer Centene Corp. said it had paid $221 million in Covid-19 claims through May, amounting to less than 1% of its total medical costs.
New coronavirus-related costs for insurers have been more than offset by a decline in other medical care, as patients defer elective surgeries and skip emergency visits. Centene expects the net effect of the pandemic, which began to spread widely in the U.S. in March, to lower its medical costs for the year, the company said in a virtual presentation on Friday.
The average cost of an inpatient Covid claim was $9,500, Centene said, while intensive-care claims were about double that. The company expects only 75% to 80% of deferred medical procedures to return this year, Chief Financial Officer Jeff Schwaneke said.
The effect on insurance rates for 2021 will vary depending on the state.
“It’s market by market,” Chief Executive Officer Michael Neidorff said in an interview with Bloomberg News after the presentation.
Centene’s New York state unit, Fidelis Care, has asked regulators to approve an 18.8% rate increase for its individual market plans for 2021, according to state filings. About 8% of that is driven by Covid-19, including expected medical costs for Covid treatment, testing and vaccines, and pent-up demand for care people have put off.
New York regulators still have to approve the proposed rate increases. Neidorff said other markets may see smaller changes.
Centene’s business focuses on government-sponsored health programs including Medicaid and the Affordable Care Act marketplaces. The company raised its 2020 earnings forecast on expectations that membership will grow as unemployment rises and people lose employer-provided coverage.
Shares of Centene pared earlier gains and were up 1.7% to $61.30 at 2:32 p.m. in New York.
“While record high unemployment rates are not the way we want to grow, we believe it’s critical that we are able to support additional members during this difficult time,” Neidorff said at the investor presentation.
Centene added more than half a million Medicaid members during April and May combined, the company said, about a 4.4% increase from the end of March. The company is expecting membership to peak in the third quarter and then decline as unemployment declines and people return to jobs.
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