Centene (CNC) Wins Medicaid Contract to Better Serve Michigan

Centene Corporation CNC recently disclosed that its Michigan subsidiary, Meridian, was selected by the Michigan Department of Health and Human Services to continue offering Medicaid health plans across the state. The plans will be offered as part of the Comprehensive Health Care Program, which caters to roughly two million Michigan residents.

The new Medicaid contracts are likely to commence from the very beginning of October 2024 and run for a period of five years. It will also have the option to undergo three extensions for one year each.

Centene’s unit will benefit from the opportunity to continue its collaborative work with the local partners and communities of Michigan and, subsequently, gain an in-depth understanding of the diversified healthcare needs of the statewide residents. Enhanced access to quality care services will inevitably result in improved health outcomes across Michigan.

Meridian boasts an impressive history of providing government-sponsored managed care services to families, children, seniors and individuals grappling with complex medical needs through Medicaid, Medicare Advantage and Medicare Prescription Drug Plans, Medicare-Medicaid Plans and Health Insurance Marketplace plans.

A solid Medicaid network has been built by Meridian in Michigan by offering innovative and equitable care in the state for nearly three decades. Therefore, the recent contract win is expected to attract new members as well as retain existing ones within the health plans of Centene in Michigan. This, in turn, may boost the customer base of Centene’s subsidiary and further solidify the footprint of the health insurer across the state.

The Medicaid business remains a significant unit for CNC as it accounts for a significant portion of the overall customer base. Its Medicaid membership was 14.5 million as of Dec 31, 2023. A growing customer base drives premiums, which usually contributes the most significant chunk to a health insurer’s top line. Premiums rose 6.7% year over year in 2023 for Centene.

The strength of the Medicaid business fetches it with contract wins from time to time. CNC has built this business with the help of several provider collaborations and significant investments and, therefore, is equipped to distribute cost-effective health plans across different U.S. communities. The company oversees Medicaid contracts across 31 states.

In January 2024, Centene’s unit, NH Healthy Families, was awarded a managed care contract by the New Hampshire Department of Health and Human Services to serve members of the state’s Medicaid program, Medicaid Care Management.

Similar to Centene, other health insurers, such as UnitedHealth Group Incorporated UNH, Humana Inc. HUM and Molina Healthcare, Inc. MOH, boast a strong Medicaid business, which endows them with contract wins from time to time and expands membership growth.  

UnitedHealth Group distributes Medicaid plans through the UnitedHealthcare unit. Its Medicaid unit benefits from numerous contract wins that it receives from different state authorities from time to time. As of Dec 31, 2023, UnitedHealthcare served nearly eight million Medicaid members. Premiums grew 13.1% year over year in 2023.

Humana benefits on the back of higher premiums and an expanding customer base across its Medicaid business. HUM resorts to collaborations with well-reputed organizations to launch new plans or upgrade features within the existing ones. Numerous contract wins and renewed agreements also contribute to its membership growth. Membership in state-based contracts is anticipated to witness an increase of 250,000 in 2024 for the health insurer.

Molina Healthcare devises affordable Medicaid plans infused with widespread benefits that have often endowed contract wins. As of Dec 31, 2023, MOH catered to around 4.5 million Medicaid members. Premiums from the Medicaid business line advanced 6% year over year in 2023. Management is optimistic to achieve long-term premium revenue growth of 13-15%.

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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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