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| Statement |
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| In Marketplace, our reported fourth quarter MCR was 79.8%, reflecting our continued success in returning this business to target margins |
| We expect the business to achieve mid to high single-digit margins, membership to grow over 30% and revenue to grow 17% |
| Our fourth quarter results and performance metrics demonstrated strong medical cost management and operating cost discipline |
| Medicaid continued to perform well, withstanding the impacts of the unprecedented redetermination process |
| As Joe mentioned, we are confident that our 2024 bid strategy adjustments to benefit design as well as operational improvements will produce target margins in our Medicare business in 2024 |
| Our fourth quarter completes a strong year of operating and financial performance |
| 31% membership growth, 17% revenue growth just this year, and hopefully we'll be able to grow it at this rate in the future, all with the goal of achieving mid to high single-digit margins |
| The book is very well positioned to grow |
| We're very competitively positioned this year |
| I am confident that our 2024 bid strategy, adjustments to benefit design and various operational improvements will return the business to target margins in 2024 |
| This business is now positioned to grow at a rate, which allows us to sustain mid-single-digit margins |
| In addition to delivering strong financial results, in 2023, we continued to execute on our profitable growth strategy |
| So we are very confident in the restoration of our MCRs back to the top end of the range in Medicare to 88% in 2024 |
| In January, we successfully reprocured our contract in Texas for the state's STAR+PLUS program, retaining all eight regions and likely growing market share |
| We expect the majority of this to emerge in 2025 giving us further confidence in our 15% to 18% long-term growth rate for EPS |
| And our quarterly EPS will be weighted slightly heavier towards the second half of the year as we drive improved performance in our new business portfolio additions over the course of the year |
| We anticipate our Medicare MCR to be 88%, while at the high end of our long-term target range, the MCR reflects our expected success in our 2024 bid strategy adjustments to benefit design and various operational improvements |
| We are still 75% silver, which bodes well for medical margin stability |
| Our reserve approach remains consistent with prior quarters, we are confident in the strength of our reserve position |
| These ratios reflect our low leverage position and ample cash and capital capacity for additional growth and investment |
| We are proven partners with all three of these states, and we are confident in our ability to retain and grow these relationships |
| Our capital foundation remains strong |
| With our demonstrated capabilities and referenceable track record, we remain confident in our ability to continue to win new state contracts |
| With respect to our M&A initiatives, our acquisition pipeline remains robust with actionable opportunities and we are confident in our ability to deliver growth from this key component of our strategy |
| The pipeline of opportunities, fueling our future growth trajectory is extremely strong |
| On a consolidated basis, our fourth quarter MCR was 89.1% and our full year was 88.1%, reflecting continued strong medical cost management |
| The execution of our strategy and business model has been and will continue to be strong which is why we look to the future with a great deal of confidence |
| But we keep it stable, which means we continue to have really good renewals |
| In summary, we are very pleased with our 2023 performance, our trajectory to deliver the growth and profitability inherent in our 2024 guidance and the embedded earnings outlook we provided for 2025 |
| Our Marketplace product has been priced right, is competitively positioned and the risk pool has stabilized |
| Statement |
|---|
| We did concede a little bit of margin in our pricing for 2024 just because we were well below our target range |
| Our full year Marketplace MCR of 75.3% was well below our long-term target range |
| On the bright with the PDR in the MLR line, it does pull it down a little bit below our target range |
| While the business is profitable, we did not meet our performance expectations due to higher utilization of supplemental benefits, in-home services and high-cost drugs |
| We continue to project ultimately retaining 40% of our updated members gained, which implies a net loss of 600,000 from the redetermination process |
| As you know, we're bringing in a bunch of additional new business that puts a little more pressure in the first year, which rounds us out at the 89% that we have in guidance |
| The other thing is, and I think Joe touched on this, very often, Marketplace has attrition throughout the year such that Marketplace declines during the year |
| So we're seeing a pretty much flat carryover on legacy, a little bit of increased pressure on new store |
| The MCR included a moderate impact from the net effect of redetermination acuity shifts and corridors in several states, as well as some MCR pressure from the additions of our Iowa health plan and our My Choice acquisition |
| So even with the PDR, I'll have a very small operating loss, Josh |
| In Marketplace, we reported a 75.3% MCR for the full year, below the low end of our target range, which reflects the successful execution of our small, silver and stable strategy |
| So on PDP, as you know, we don't price a PDP product and the IRA or the Inflation Reduction Act, as you're pointing out, is certainly a headwind for that sector, but that's not too relevant to our business, George |
| Mark, anything to add? Mark Keim Yeah, in the past, when we picked up SEP members, they put a little pressure on our MLR |
| On the two things you mentioned, on the two midnight rule, I've seen a little bit of buzz about that lately, and we're a little bit surprised because it's certainly not new |
| We expect to lose 100,000 members over the remainder of the redetermination process in 2024 |
| Partially offsetting these growth drivers is a higher estimated full year impact of $1.9 billion in decreased revenue from redeterminations |
| In the quarter, we estimate we lost 200,000 members driven by redeterminations, bringing the full year figure to approximately 500,000 |
| As reconnects continue, we expect the membership losses just described to restate to a lower level over the coming months |
| Our legacy or same-store Medicaid MCR is expected to fall in the middle of our long-term range |
| So on the bright component, which is a third of our book, you'll see an MLR that's below our target range at the moment |
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