Elevance Health reported nearly $6 billion in 2024 profits including $418 million in the fourth quarter as the health insurer worked to overcome rising medical expenses from patients in its Medicaid plans.
Elevance, which operates Blue Cross and Blue Shield health plans in 14 states as well as government-subsidized Medicaid benefits for the poor and Medicare Advantage plans for seniors, has been struggling like other health insurers to control costs amid an influx of patients seeking medical treatment. Health insurers are seeing an uptick in claims submitted by patients executives say is driven in part by a pent up demand for medical care put off during the Covid-19 pandemic. In Elevance’s case, the company is experiencing an influx of sick patients insured by Medicaid.
Elevance’s benefit expense ratio, which is the percentage of premium revenue that goes toward medical costs, rose dramatically. The health insurer’s benefit expense ratio was “92.4 percent in the fourth quarter, an increase of 320 basis points compared to the prior year period, and 88.5 percent for the full year, an increase of 150 basis points year over year,” the company said in its earnings report released Thursday.
Those rising costs helped cause fourth quarter net income to essentially be cut in half to $418 million, or $1.81 per share, compared to $856 million, or $3.63 per share. For the full year 2024, net income was largely flat at $5.98 billion, or $25.68 a share, compared to $5.987 billion, or $25.22 a share in 2023. Total revenue rose 6.6% to $45.4 billion in the fourth quarter and increased 3.3% to $177 billion for all of last year.
“As part of our commitment to elevating whole health and advancing health beyond healthcare, we deliver value to the members and care providers we serve by ensuring simple, affordable, and accessible care,” Elevance Health chief executive Gail Boudreaux said in a statement accompanying its earnings report. “Our fourth quarter results demonstrate tangible progress in improving our operations in response to the dynamic environment facing the industry. As we look to 2025, we remain resolute in our goal to simplify the healthcare experience, deepen the impact of Carelon, and deploy innovative care models, positioning us to achieve sustainable growth over the long run.”
Elevance Health ended the year with fewer health plan members largely from a drop in Medicaid customers.
The end of the U.S. Public Health Emergency in May of 2023 after three years of the COVID-19 pandemic has impacted health insurers that have a significant business administering Medicaid coverage for states, which conducted so-called “Medicaid redeterminations.” Medicaid redetermination, also described as Medicaid renewal or Medicaid recertification, is essentially when people are asked to show they are qualified for such coverage.
Elevance’s medical membership decreased 2%, or 1.1 million, to 45.7 million as of December 31, 2024, “driven by attrition in our Medicaid business, partially offset by growth in Employer Group fee-based and Affordable Care Act health plan membership.”
“As part of our commitment to elevating whole health and advancing health beyond healthcare, we deliver value to the members and care providers we serve by ensuring simple, affordable, and accessible care,” Elevance Health chief executive Gail Boudreaux said in a statement accompanying its earnings report. “Our fourth quarter results demonstrate tangible progress in improving our operations in response to the dynamic environment facing the industry. As we look to 2025, we remain resolute in our goal to simplify the healthcare experience, deepen the impact of Carelon, and deploy innovative care models, positioning us to achieve sustainable growth over the long run.”
To be sure, the company’s Carelon business, which includes the medical care providers and the pharmacy benefit management business CarelonRx, reported a 19 percent increase in operating revenue to $14.7 billion in the fourth quarter of 2024.
“Operating revenue was $53.9 billion in 2024, an increase of $5.9 billion, or 12 percent,” the company said of Carelon. “The increases for the quarter and the year were driven by the launch and growth of risk-based capabilities in Carelon Services and acquisitions completed in 2024.”