Here are first-quarter earnings reports of health insurance agents and brokers.
UnitedHealth Group (NYSE:UNH) reported solid results but intense unhappiness with the Patient Protection and Affordable Care Act (PPACA) public exchange system.
Centene Corp. (NYSE:CNC) said it was happy with the PPACA exchange system. Anthem (NYSE:ANTM) and Aetna (NYSE:AET) said they still want to work with exchange system managers to improve the system.
Other insurance distributors and carriers gave varied, but generally positive, takes on the public exchange system, private exchange programs and other parts of the major medical market.
For a look at what Aon, Marsh & McLennan Companies, eHealth, Molina Healthcare and Aflac had to say this week, read on.
Aon (NYSE:AON and Marsh & McLennan Companies Inc. (NYSE:MMC)
The big brokers both reported drops in profits.
Aon as a whole reported $315 million in net income for the first quarter on $2.8 billion in revenue, compared with $328 million in net income on $2.8 billion in revenue for the first quarter of 2015.
Marsh & McLennan reported $490 million in net income for the latest quarter on $3.3 billion in revenue, compared with $495 million in net income on $3.2 billion in revenue for the year-earlier quarter.
Aon did not break out separate health unit results.
Marsh & McLennan said revenue at its Mercer health unit, which runs its private exchange program, increased 6 percent, to $400 million.
When Aon held a first-quarter earnings conference call with securities analysts, Gregory Case, the company’s resident, said “exchange-side clients continue to experience very, very good results.”
“A large percentage of our clients actually had rate decreases in the last cycle overall,” Case said. “Satisfaction continues to be very high. And the pipeline is very, very strong.”
eHealth, the parent of eHealthInsurance.com, helped figure out how to sell health insurance through the Web, then watched the implementers of PPACA set up the public exchange system in such a way that eHealth had a hard time playing.
The company began de-emphasizing sales of individual and family major medical coverage last year and focusing on sales of private Medicare plans.
The company is reporting $18 million in net income for the latest quarter on $74 million in revenue, up from a net loss of $2 million on $61 million in revenue for the first quarter of 2015.
The number of Medicare applications it took during the quarter increased 53 percent, to 30,900, as the number of ordinary major medical applications taken fell 47 percent, to 74,300.
The total number of Medicare enrollees covered increased 42 percent, to 220,300, and the total number of ordinary major medical enrollees served decreased 11 percent, to 523,000.
Even though the number of ordinary major medical applications taken fell sharply, ordinary major medical commission revenue decreased just 7 percent, to $20 million. Overall commission revenue increased 20 percent, to $69 million.
Gary Lauer, eHealth’s chief executive officer, said that the Medicare business was very strong during the quarter, and that the major medical business had exceeded the company’s expectations.
During the eHealth first-quarter earnings call, Stuart Huizinga told analysts that it needs to do less on the telephone to support major medical enrollees, including PPACA exchange plan enrollees, in states served by the U.S. Department of Health and Human Services (HHS) HealthCare.gov states.
Because supporting major medical enrollees in states with state-based exchanges tends to take more telephone work, and eHealth has reduced the size of its ordinary major medical customer service staff, the company often sells sales leads for major medical business in those states to other major medical sellers, Huizinga said.
Molina Healthcare (NYSE:MOH)
Like Centene, Molina is known for its Medicaid and Children’s Health Insurance Program (CHIP) plans.
Like Centene, Molina is mostly happy with the performance of the PPACA exchange system.
Molina is reporting $24 million in net income for the latest quarter on $4.3 billion in revenue, compared with $28 million in net income on $3.2 billion in revenue for the year-earlier quarter.
The company ended the quarter providing or administering major medical coverage for 4.2 million people, up from 3 million people a year earlier.
Enrollment in public exchange plans increased to 630,000, from 266,000 a year earlier.
Molina collected about $252 in premiums per member per month (PMPM) for exchange plan enrollees, and it had about $206 PMPM in medical costs for those members, giving the exchange plan enrollees a medical cost ratio of 81.7 percent. The company’s medical cost ratio for the exchange plan enrollees was the lowest for any of the markets Molina serves.
Both the exchange plan enrollee revenue and cost figures are lower than they were in the first quarter of 2015, but that’s because Molina is getting better at understanding how to apply adjustments for the PPACA risk-adjustment program, which is supposed to use cash from issuers with relatively low-risk enrollees to help issuers with higher-risk enrollees.
Joseph White, Molina’s chief accounting officer, said during the company’s earning call that Molina exchange plans tend to attract relatively healthy, highly subsidized consumers who have been using the company’s Medicaid plans.
“We’re not expecting this business to produce 5 percent or 10 percent margins,” White said. “We’re expecting it to produce margins consistent with Medicaid.”
The fact that Molina went in with modest profit margin expectations may be why it’s happier with the exchange system than some other companies, White said.
Joseph Mario Molina, the company’s chairman, said he’s happy to see exchange enrollment starting to stabilize this year.
“That should give us a chance to catch our breath as an organization while we continue to build on our current infrastructure,” Molina said.
Molina also took a question about the effects of Zika on operations in Puerto.
Concern about Zika may be “driving a little bit of utilization,” he said. “But I don’t think we’re having catastrophic costs related to Zika at this point.”
Aflac is reporting $731 million in net income for the first quarter on $5.4 billion in revenue, up from $663 million in net income on $5.2 billion in revenue for the first quarter of 2015.
Aflac said that it expects to see U.S. sales rise about 3 percent to 5 percent this year, and that competition is increasing, but it said nothing about the U.S. major medical insurance markets or about the effects of changes in that market affecting employer preferences.
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