Health insurer Centene, one of the nation’s biggest providers of individual coverage under the Affordable Care Act known as Obamacare, on Tuesday withdrew its 2025 guidance, saying market growth in more than 20 states is lower than expected.
In a Tuesday afternoon announcement that jarred investors, Centene said an independent actuarial firm’s analysis in 22 states where it sells individual coverage on the ACA’s marketplaces showed “overall market growthto be “lower than expected and the implied aggregate market morbidity in those states is significantly higher than, and materially inconsistent with, the Company’s assumptions for risk adjustment revenue transfer used in the preparation of its previous 2025 consolidated guidance.”
Centene said the analysis by Wakely, an independent actuarial firm, covers 22 of the 29 states where Centene sells individual coverage on the marketplace and represents about 72% of the company’s marketplace membership.
“The Company’s preliminary analysis of the 22 states results in a reduction to its previous full year net risk adjustment revenue transfer expectation by a preliminary estimate of approximately $1.8 billion which corresponds to an adjusted diluted EPS impact of approximately $2.75,” Centene said in its announcement. “This preliminary estimate includes a projection of the remaining eight months of 2025 and is based on 2025 paid claims through April 30 from Wakely for the 22 states, as well as the Company’s membership estimates and morbidity trend estimates for both its members and the aggregate market, calculated by state.”
Centene’s enrollment in Obamacare, grew by 29% to 5.6 million members in the first quarter of this year from 4.3 million a year-ago, the company reported in April. That increase of more than 1 million health plan members came after an expansion by the company in new markets for 2025 and helped overcome a decrease of more than 330,000 enrollees in Medicaid coverage for poor Americans that Centene administers.
Centene said it does not have information or estimates for the remaining seven states where it sells Obamacare “but anticipates, due to the morbidity trends observed in the 22 states, an additional reduction to its net risk adjustment revenue transfer expectation with a corresponding adjusted diluted EPS impact.”
Tuesday’s news from Centene comes on the same day the U.S. Senate passed a budget bill that could also hit the health insurer and other providers of Obamacare hard. The legislation, which still has to be approved by the U.S. House of Representatives, is projected to force 11 million Americans to lose health insurance coverage and most of those people will come from Obamacare plans and Medicaid coverage for low income Americans that is also administered by Centene.
Centene said its “in the process of closing the second quarter and analyzing data, including in Marketplace and Medicaid, and expects to report the second quarter 2025 results and provide additional insights on July 25.”
