By Lauren Flynn Kelly

Select publicly traded insurers that reported second-quarter 2019 earnings in late July were tracking elevated medical loss ratios (MLRs) that were partly if not solely driven by their Medicaid businesses, while seeing growth in other areas.

Second quarter earnings per share for Anthem, Inc. came in slightly ahead of Wall Street expectations at $4.64, driven by growth in its fully insured business, but analysts appeared concerned with an increased MLR that the company said was mainly due to “elevated medical costs” in its Medicaid segment. At 86.7%, that MLR was 330 basis points higher than the 83.4% it reported in the year-ago quarter.

Centene Corp. on July 23 reported an elevated MLR of 86.7%, up 100 basis points from the second quarter of 2018 and from the first quarter of 2019. The company said the MLR increase largely stemmed from a “normalization” of its Affordable Care Act (ACA) marketplace business, as well as the ACA health insurer fee holiday and the company’s mid-2018 acquisition of Fidelis Care.

But as a recent Milliman report on Medicaid managed care financials observed, MLRs are prone to fluctuation and reflect the uniqueness of a state’s individual Medicaid program and the managed care organization’s reporting metrics.

According to the report tracking key financial metrics for 174 managed Medicaid companies, insurers in 2018 had an average MLR of 87.3%, compared with 86% in 2014 and 88.2% in 2017.

The report also serves as a reminder of the “interesting dynamics” going on in each state, and shows that while MLR has “changed incrementally from previous years, it now starts to document a decrease in managed care rates that we’ve seen for the expansion populations in states that have already expanded,” observes Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors.