Elevance Health records $1.6B profit as it braces for recession
As the U.S. heads toward a possible recession, Elevance Health CEO Gail Boudreaux said the insurer is preparing for a possible economic decline.
“Certainly we’re mindful of an economic downturn. We’re planning for it in our businesses,” Boudreaux said on a Wednesday call with investors to discuss third-quarter earnings.
Job losses spurred by a recession could cut into commercial enrollment for insurers who generate revenue from selling health coverage to employers of all sizes. About half of the U.S. population relies on employer-based insurance for coverage.
Economists surveyed by The Wall Street Journal predict nonfarm payrolls, a measure of U.S. workers, to decline by about 34,000 per month during the second quarter of 2023.
Boudreaux attempted to temper concerns about the impact a recession may have on the company.
This is a “much more resilient business” than it was in 2008 during the Great Recession, Boudreaux said.
Currently, 25% of premiums are derived from commercial business compared with 70% in 2008, Boudreaux said.
The landscape is different, too.
The last recession preceded the Affordable Care Act, which has served as a safety net, providing continuous coverage amid economic upheaval.
Medicaid expansion and subsidized plans available on the marketplace serve as another avenue for people to gain health insurance after job losses. As a result, the uninsured rate remained stable in 2020 even amid staggering job losses.
Elevance, previously known as Anthem, has expanded access to both Medicaid and marketplace plans. The company has also “invested heavily” in its digital products so it can maintain its cost structure, Boudreaux said.
The Indianapolis-based insurer beat Wall Street expectations for the third quarter and raised its earnings target for the full year.
Elevance’s profit climbed to $1.6 billion for the third quarter, a 7% increase compared with the prior-year period on a bigger membership base of 47.3 million members.