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Delta Variant Could Lead to Worse Variants: Centene CEO

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What You Need to Know

  • Centene's CEO warned that if the delta variant is not brought under control, it could lead to worse variants.
  • In June, the number of COVID-19-related hospitalizations climbed 57%.
  • Centene posted a net loss for the second quarter because of a big legal settlement. Revenue increased 12%, to $31 billion.

The head of one of the largest U.S. health insurers told securities analysts Tuesday that the COVID-19 pandemic has made a comeback.

Michael Neidorff, the chairman and CEO of Centene, warned about  the resurgence of the pandemic during a conference call the company held to go over second-quarter earnings.

The second quarter ended June 30.

The COVID-19 delta variant has changed the environment for health insurance dramatically in just the past week or so, and the variant now is causing a new wave of the pandemic, Neidorff said.

“It’s a pandemic of the unvaccinated,” Neidorff said. “It is clear that one of the issues we must address is vaccine hesitancy, to stop the transmission of this virus and protect those who cannot safely receive the inoculation, including young children.”

An epidemiologist who is advising Centene believes that the delta variant leads to a much higher concentration of the virus in respiratory material than the original strain did, and that an individual infected with the delta strain can spread the virus to five to eight other people, up from an average of 2.4 for individuals infected with the original strain, Neidorff said.

About 83% of U.S. COVID-19 cases are now delta variant cases, and the number of hospitalizations increased 57% last month, Neidorff said.

“Deaths have increased by 19% in the last week alone,” Neidorff added. “And, importantly, 97% of people currently hospitalized for COVID-19 are unvaccinated, and 99.5% of the COVID-related deaths are among the unvaccinated.”

Centene has tried to promote the COVID-19 vaccination campaign by calling its members, creating public service announcements that will air on 150 TV stations, and participating in about 80 vaccination events, Neidorff said.

The firm’s epidemiologists are telling it that, if the country fails to use vaccinations to get the delta variant under control, “the next one is even worse,” he added.

Yet Centene is confident about its ability to manage through the pandemic, Neidorff assured the analysts.

“But we wanted investors to understand that this is out there,” he said. “It’s not business as usual, as everyone had hoped. We wish everybody was vaccinated.”

The Earnings

Centene — a Clayton, Missouri-based health insurer that focuses on serving low and moderate-income people and Medicare enrollees  — reported a $535 million net loss for the second quarter on $31 billion in revenue, compared with $1.2 billion in net income on $28 billion in revenue for the second quarter of 2020.

The net loss was due mainly to a $1.25 billion legal settlement associated with Medicaid plan pharmacy benefits in Ohio.

Centene ended the quarter providing or administering health coverage for 25 million people, or about 3% more than it was covering a year earlier.

Here’s what happened to key types of enrollment between the second quarter of 2020 and the latest quarter:

  • Medicare Plans: 1.2 million (up from 936,500)
  • U.S. Commercial Major Medical Insurance: 2.5 million (down from 2.8 million)
  • Affordable Care Act Public Exchange Plans: 2 million (down from 2.2 million)
  • Medicaid and Similar Programs: 14 million (up from 13 million)
  • International: 600,600 (up from 600,400)

(Image: CDC)