MOLINA HEALTHCARE INC
For the period ended Jun 30, 2024. Filed Jul 25, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 25, 2024
MOH$208.99-3.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-25.
0001179929-24-000089
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0001179929-24-000123
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 185 previous paragraphs and 188 current paragraphs.
122 unchanged; 53 reworded; 13 added; 10 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
SECOND QUARTER 2024 HIGHLIGHTS
Current report
•Membership of 5.6 million at June 30, 2024 increased 403,000, or 8%, compared with June 30, 2023, across all segments, primarily due to the new Medicaid contract wins, acquisitions, and growth in our current footprint, partially offset by the impact of Medicaid redeterminations;
Current report
•General and administrative expense (“G&A”) ratio of 7.0%, compared with 7.4% for the second quarter of 2023, reflecting operating discipline and the continued benefit of fixed cost leverage as we grow our business; and
Current report
The consolidated MCR in the second quarter of 2024 increased to 88.6%, compared with 87.5% in the second quarter of 2023, or 110 basis points. The consolidated MCR in the six months ended June 30, 2024 increased to 88.6%, compared with 87.3% MCR for the six months ended June 30, 2023, or 130 basis points. The increase in both periods reflects changes in member mix due to growth across all segments, due to the expected higher initial MCRs related to new contracts, recent acquisitions and organic growth, and modest medical cost pressure, partially offset by minimum MLRs and medical cost corridors and continued disciplined medical cost management. See further discussion in “Reportable Segments—Segment Financial Performance,” below.
Current report
Investment income increased to $115 million in the second quarter of 2024, compared with $97 million in the second quarter of 2023, and increased to $223 million in the six months ended June 30, 2024, compared with $168 million in the six months ended June 30, 2023. The increase in both periods was primarily driven by higher average yields on the investment portfolio.
Current report
Depreciation and amortization was $46 million in the second quarter of 2024, compared with $42 million in the second quarter of 2023, and was $91 million in the six months ended June 30, 2024, compared with $86 million in the six months ended June 30, 2023. The increase in both periods is due to the closing of the My Choice Wisconsin and Bright Health Medicare acquisitions.
Current report
Connecticut Acquisition—Marketplace and Medicare. On July 23, 2024, we announced a definitive agreement to acquire ConnectiCare Holding Company, Inc. (“ConnectiCare”), a wholly owned subsidiary of EmblemHealth, Inc. ConnectiCare is a leading health plan in the state of Connecticut serving approximately 140,000 members across Marketplace, Medicare, and certain commercial products as of June 30, 2024. The purchase price for the transaction is approximately $350 million, which we intend to fund with cash on hand. The transaction is subject to applicable federal and state regulatory approvals and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the first half of 2025.
Current report
Florida Procurement—Medicaid. In July 2024, we were notified that the Florida Agency for Healthcare Administration awarded a Medicaid managed care contract to Molina Healthcare of Florida. The contract term is expected to commence on January 1, 2025, and to run through December 31, 2030. We expect to serve approximately 90,000 Medicaid beneficiaries in Miami-Dade and Monroe Counties.
Current report
New Mexico Procurement—Medicaid. Our new contract with the New Mexico Health Care Authority commenced on July 1, 2024 and will run through December 31, 2026. The new contract added approximately 33,000 members.
Current report
Wisconsin Procurement—Medicaid. In May 2024, we were notified that the Wisconsin Department of Health Services intends to make an award for the purchase of services under the Family Care and Family Care Partnership program in its Geographic Service Region 5 to Molina Healthcare of Wisconsin. The go-live date is expected to be January 1, 2025, and the contract is expected to have a duration of two years, with an option for three two-year extensions.
Current report
SEGMENT MEMBERSHIP
Current report
The Medicare MCR decreased to 84.9% in the second quarter of 2024, from 89.2% in the second quarter of 2023, or 430 basis points. The Medicare MCR decreased to 86.8% in the six months ended June 30, 2024, compared to 88.6% in the six months ended June 30, 2023, or 180 basis points. The decreases in each period were primarily driven by higher risk adjustment premiums that are more commensurate with the acuity of our membership, pricing and benefit design changes implemented in 2024 and operational improvements. The Medicare MCR for the six months ended June 30, 2024 is slightly below our long-term target range.
Current report
Acquisitions. Connecticut Acquisition—Marketplace and Medicare. On July 23, 2024, we announced a definitive agreement to acquire ConnectiCare Holding Company, Inc. (“ConnectiCare”), a wholly owned subsidiary of EmblemHealth, Inc. ConnectiCare is a leading health plan in the state of Connecticut serving approximately 140,000 members across Marketplace, Medicare, and certain commercial products as of June 30, 2024. The purchase price for the transaction is approximately $350 million, which we intend to fund with cash on hand. The transaction is subject to applicable federal and state regulatory approvals and the satisfaction of other customary closing conditions. We currently expect the transaction to close in the first half of 2025.
Removed paragraphs (10)
Previous report
FIRST QUARTER 2024 HIGHLIGHTS
Previous report
•Membership of 5.7 million at March 31, 2024 increased 461,000, or 9%, compared with March 31, 2023, primarily due to the commencement of the Iowa Medicaid contract in July 2023, the Nebraska Medicaid contract in January 2024, our expanded California Medicaid platform, including Los Angeles county starting in January 2024, closing of the My Choice Wisconsin acquisition in September 2023, and the closing of the Bright Health Medicare acquisition in January 2024, all of which was partially offset by the impact of Medicaid redeterminations;
Previous report
•General and administrative expense (“G&A”) ratio of 7.2%, which was consistent with the first quarter of 2023, reflecting new business implementation spending for new contract wins that started in July 2023 and in January 2024; and
Previous report
The change in operating income was mainly due to the expected higher initial MCRs related to new contracts, recent acquisitions and organic growth, and higher G&A expense associated with growth, partially offset by the impact of increased premium revenue and higher investment income.
Previous report
The consolidated MCR was 88.5% in the first quarter of 2024, and 87.1% in the first quarter of 2023. The results reflect an increase in each segment, due to the expected higher initial MCRs related to new contracts, recent acquisitions and organic growth, partially offset by certain rate actions and continued strong operating performance and medical cost management. See further discussion in “Reportable Segments—Segment Financial Performance,” below.
Previous report
Investment income increased to $108 million in the first quarter of 2024, compared with $71 million in the first quarter of 2023. The increase was driven by higher levels of invested assets and higher interest rates.
Previous report
Depreciation and amortization was $45 million in the first quarter of 2024, compared with $44 million in the first quarter of 2023.
Previous report
Florida Procurement—Medicaid. In April 2024, we were notified that the Florida Agency for Health Care Administration issued a notice of invitation to negotiate which did not include Molina Healthcare of Florida as an awardee. We are exercising our right to protest the decision.
Previous report
The Medicare MCR increased to 88.7% in the first quarter of 2024, from 88.0% in the first quarter of 2023, or 70 basis points. The increase was primarily driven by continued higher long-term services and supports costs and pharmacy utilization we began experiencing in the second half of 2023, partially offset by pricing, benefit design changes, operational improvements and medical cost management in the legacy business. The Medicare MCR for the first quarter of 2024 is slightly above our long-term target range.
Previous report
Acquisitions. We have a disciplined and steady approach to growth. Organic growth, which includes leveraging our existing health plan portfolio and winning new territories, is our highest priority. In addition to organic growth, we will consider targeted acquisitions that are a strategic fit that we believe will leverage operational synergies, and lead to incremental earnings accretion. For further information on our acquisitions, refer to the Notes to Consolidated Financial Statements, Note 4, “Business Combinations.”
Reworded paragraphs (53)
Previous wording
•our ability to close, integrate, and realize benefits from acquisitions, including the acquisitions of My Choice Wisconsin, and Brand New Day/Central Health Plan of California;
Current wording
•our ability to integrate, and realize benefits from acquisitions, including the completed acquisitions of My Choice Wisconsin, and Brand New Day/Central Health Plan of California and the announced acquisition of ConnectiCare;
Previous wording
•subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including changes to estimated amounts payable or receivable related to Marketplace risk adjustment;
Current wording
•subsequent adjustments to reported premium revenue based upon subsequent developments or new information, including retroactive Medicaid rate adjustments in a state or changes to estimated amounts payable or receivable related to Marketplace risk adjustment;
Previous wording
•cyber-attacks, ransomware attacks, or other privacy or data security incidents involving either ourselves or our contracted vendors that result in an inadvertent unauthorized disclosure of protected information, and the extent to which our working in a remote work environment heightens our exposure to these risks;
Current wording
•cyber-attacks, ransomware attacks, or other privacy or data security incidents involving either ourselves or our contracted vendors, such as Change Healthcare or CrowdStrike, that result in an inadvertent unauthorized disclosure of protected information or operational delays, and the extent to which our working in a remote work environment heightens our exposure to these risks;
Previous wording
•increasing competition and consolidation in the Medicaid industry.
Current wording
•increasing competition and consolidation in the Medicaid or general healthcare sector.
Previous wording
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We served approximately 5.7 million members as of March 31, 2024, located across 21 states.
Current wording
Molina Healthcare, Inc., a FORTUNE 500 company, provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the “Marketplace”). We served approximately 5.6 million members as of June 30, 2024, located across 21 states.
Previous wording
We reported net income of $301 million, or $5.17 per diluted share, for the first quarter of 2024, which reflected the following:
Current wording
We reported net income of $301 million, or $5.17 per diluted share, for the second quarter of 2024, which reflected the following:
Previous wording
•Premium revenue of $9.5 billion, which increased 21% compared with the first quarter of 2023 due to the increased membership in all segments mentioned above;
Current wording
•Premium revenue of $9.4 billion, which increased 17% compared with the second quarter of 2023 due to the increased membership in all segments mentioned above;
Previous wording
•Consolidated medical care ratio (“MCR”) of 88.5%, compared with 87.1% for the first quarter of 2023, with all three segments reporting MCRs in line with our expectations;
Current wording
•Consolidated medical care ratio (“MCR”) of 88.6%, compared with 87.5% for the second quarter of 2023;
Previous wording
•Investment income of $108 million, which increased 52% compared with the first quarter of 2023, and continues to bolster our operating income results;
Current wording
•Investment income of $115 million, which increased 19% compared with the second quarter of 2023, and continues to bolster our operating income results;
Previous wording
Net income in the first quarter of 2024 amounted to $301 million, or $5.17 per diluted share, compared with $321 million, or $5.52 per diluted share, in the first quarter of 2023. The 6% decrease in net income is consistent with the decline in operating income, which decreased to $426 million in the first quarter of 2024, compared with $455 million in the first quarter of 2023.
Current wording
Net income in the second quarter of 2024 amounted to $301 million, or $5.17 per diluted share, compared with $309 million, or $5.35 per diluted share, in the second quarter of 2023. Net income in the six months ended June 30, 2024 amounted to $602 million, or $10.33 per diluted share, compared with $630 million, or $10.87 per diluted share, in the six months ended June 30, 2023. The decrease in net income for both periods is due to decrease in operating income from the higher MCRs related to new contracts, recent acquisitions and organic growth, partially offset by improvement in the G&A expense ratio and increase in investment income.
Previous wording
Premium revenue increased $1.6 billion, or 21%, in the first quarter of 2024, when compared with the first quarter of 2023. The higher premium revenue reflects a balanced combination of the new contract wins, acquisitions, and growth in our current footprint, partially offset by the impact of Medicaid redeterminations. See further discussion in “Reportable Segments—Segment Financial Performance,” below.
Current wording
Premium revenue increased $1.4 billion, or 17%, in the second quarter of 2024, when compared with the second quarter of 2023, and increased $3.0 billion, or 19%, in the six months ended June 30, 2024, when compared with the six months ended June 30, 2023. The higher premium revenue reflects the impact of a balanced combination of the new Medicaid contract wins, acquisitions, and growth in our current footprint, partially offset by the impact of Medicaid redeterminations. See further discussion in “Reportable Segments—Segment Financial Performance,” below.
Previous wording
The prior year reserve development in the first quarter of 2024 was favorable, but its impact on earnings was mostly absorbed by minimum MLRs and medical cost corridors.
Current wording
The prior year reserve development in the six months ended June 30, 2024 was favorable, but its impact on earnings has been mostly absorbed by minimum MLRs and medical cost corridors.
Previous wording
The premium tax ratio (premium tax expense as a percentage of premium revenue plus premium tax revenue) was 3.0% and 2.1% for the first quarter of 2024 and 2023, respectively. The current year ratio increase was mainly due to the reinstatement of the California managed care organization tax by the state’s Department of Health Care Services in the fourth quarter of 2023 and changes in business mix.
Current wording
The premium tax ratio (premium tax expense as a percentage of premium revenue plus premium tax revenue) was 3.1% and 2.0% for the second quarter of 2024 and 2023, respectively, and 3.0% and 2.1% for the six months ended June 30, 2024 and 2023, respectively. The current year ratio increases were mainly due to the reinstatement of the California managed care organization tax by the state’s Department of Health Care Services in the fourth quarter of 2023 and changes in business mix.
Previous wording
Other revenue amounted to $22 million in the first quarter of 2024, compared with $21 million in the first quarter of 2023. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.
Current wording
Other revenue increased slightly to $21 million in the second quarter of 2024, compared with $19 million in the second quarter of 2023, and increased to $43 million in the six months ended June 30, 2024, compared with $40 million in the six months ended June 30, 2023. Other revenue mainly includes service revenue associated with long-term services and supports consultative services we provide in Wisconsin.
Previous wording
The G&A expense ratio of 7.2% in the first quarter of 2024 was consistent with the first quarter of 2023. G&A expenses in the first quarter of 2024 reflect deployment costs for new business implementations associated with the Nebraska and California Medicaid contracts wins that started in January 2024, and was partially offset by the benefits of scale produced by our year-over-year growth and continued disciplined cost management.
Current wording
The G&A expense ratio was 7.0% in the second quarter of 2024, compared with 7.4% in the second quarter of 2023. The G&A expense ratio was 7.1% in the six months ended June 30, 2024, compared with 7.3% in the six months ended June 30, 2023. G&A expenses in the six months ended June 30, 2024 reflect operating discipline and the continued benefit of fixed cost leverage as we grow our business, partially offset by new business implementation costs associated with the Nebraska and California Medicaid contracts wins that started in January 2024.
Previous wording
Other operating expenses totaled $38 million in the first quarter of 2024 compared to $16 million in the first quarter of 2023, and the increase in the first quarter of 2024 reflects certain non-recurring costs associated with acquisitions, and costs for litigation dating back to 2013. Other operating expenses also include service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above.
Current wording
Other operating expenses increased to $43 million in the second quarter of 2024, compared with $17 million in the second quarter of 2023, and increased to $81 million in the six months ended June 30, 2024, compared with $33 million in the six months ended June 30, 2023. The increases in both periods reflect non-recurring costs associated with acquisitions, and costs for litigation dating back to 2013. Other operating expenses also include service costs associated with long-term services and supports consultative services we provide in Wisconsin, as noted above.
Previous wording
Interest expense totaled $27 million in the first quarter of 2024 and was $28 million in the first quarter of 2023.
Current wording
Interest expense was $28 million and $27 million in the second quarter of 2024 and 2023, respectively, and $55 million for both the six months ended June 30, 2024 and 2023.
Previous wording
Income tax expense amounted to $98 million in the first quarter of 2024, or 24.5% of pretax income, compared with income tax expense of $106 million, or 25.0% of pretax income in the first quarter of 2023. The difference in the effective tax rate is primarily due to state income taxes and differences in discrete tax benefits recorded in the respective periods.
Current wording
Income tax expense amounted to $105 million in the second quarter of 2024, or 25.8% of pretax income, compared with income tax expense of $107 million, or 25.5% of pretax income, in the second quarter of 2023. Income tax expense amounted to $203 million in the six months ended June 30, 2024, or 25.2% of pretax income, compared with income tax expense of $213 million, or 25.2% of pretax income, in the six months ended June 30, 2023. The difference in the effective tax rate during the quarters is primarily due to state income taxes.
Previous wording
Excluding acquisitions and our exit from Puerto Rico, we estimate we added approximately one million new Medicaid members since March 31, 2020, when we first began to report on the impacts of the pandemic. We believe this membership increase was mainly due to the suspension of redeterminations for Medicaid eligibility. The Consolidated Appropriations Act of 2023 authorized states to resume redeterminations and terminate coverage for ineligible enrollees starting on April 1, 2023, irrespective of the status of the PHE. Consequently, during the third quarter of 2023, all states in which we operate had begun disenrolling members. In the first quarter of 2024, we estimate we lost approximately 50,000 members due to the net effect of redeterminations. This was on track with our expectations and brings the total count of members lost through redeterminations to 550,000. Given the high number of procedural terminations and increasing interventions by CMS and various states, we expect reconnects will likely continue, decreasing currently reported losses. Although the medical cost profile of members who have been disenrolled is more favorable than the Medicaid segment average, when combined with the beneficial impact of corridor offsets in several states, our Medicaid MCR for the first quarter ended March 31, 2024 was in line with our expectations. Based on the experience to date, we expect that we will ultimately retain approximately 40% of the membership gained since March 31, 2020.
Current wording
Excluding acquisitions and our exit from Puerto Rico, we estimate we added approximately one million new Medicaid members since March 31, 2020, when we first began to report on the impacts of the pandemic. We believe this membership increase was mainly due to the suspension of redeterminations for Medicaid eligibility. The Consolidated Appropriations Act of 2023 authorized states to resume redeterminations and terminate coverage for ineligible enrollees starting on April 1, 2023, irrespective of the status of the PHE. Consequently, during the third quarter of 2023, all states in which we operate had begun disenrolling members. In the second quarter of 2024, we estimate we lost approximately 100,000 members due to the net effect of redeterminations. This was on track with our expectations and brings the total count of members lost through redeterminations to 650,000. Given the high number of procedural terminations and increasing interventions by CMS and various states, we expect reconnects will likely continue, including 50,000 in the second half of 2024. Although the medical cost profile of members who have been disenrolled is more favorable than the Medicaid segment average, when combined with the beneficial impact of corridor offsets and rates in several states, our Medicaid MCR for the six months ended June 30, 2024 was in line with our expectations. Based on the experience to date, we expect that we will ultimately retain approximately 40% of the membership gained since March 31, 2020.
Previous wording
Michigan Procurement—Medicaid. In April 2024, we announced that the Michigan Department of Health and Human Services intends to award a Comprehensive Health Care Program contract to Molina Healthcare of Michigan. We were awarded the contract in six service regions. The go-live date for the new Medicaid contract is expected to be October 1, 2024. The new contract is expected to have a duration of five years, with three, one-year optional extensions.
Current wording
Michigan Procurement—Medicaid. In April 2024, we announced that the Michigan Department of Health and Human Services intends to award a Comprehensive Health Care Program contract to Molina Healthcare of Michigan. We were awarded the contract in six service regions. The go-live date for the new Medicaid contract is expected to be October 1, 2024. The new contract is expected to have a duration of five years, with an option for three one-year extensions.
Previous wording
Texas Procurement—Medicaid. In March 2024, we were notified of the Texas Health and Human Services Commission’s intent to award us a contract for TANF and CHIP (known as the STAR & CHIP programs, and both existing contracts for Molina), expanding our footprint and expecting to grow our market share. The start of operations for the new contract is expected to begin in the third quarter of 2025.
Current wording
Texas Procurement—Medicaid. In the first quarter of 2024, we were notified of the Texas Health and Human Services Commission’s intent to award us a contract for TANF and CHIP (known in Texas as the STAR & CHIP programs, and both existing contracts for Molina), expanding our footprint and expecting to grow our market share. The start of operations for the new contract is expected to begin in the third quarter of 2025.
Previous wording
Mississippi Procurement—Medicaid. In the first quarter of 2024, Mississippi Division of Medicaid signaled its intention to further extend the existing contracts for at least part of the state fiscal year that will begin on July 1, 2024. We now expect the new four-year contract to commence between September 1, 2024 and July 1, 2025.
Current wording
Mississippi Procurement—Medicaid. In the second quarter of 2024, the Mississippi Division of Medicaid extended the existing contracts for the state fiscal year that began on July 1, 2024. We now expect the new four-year contract, which will cover both TANF & ABD and CHIP, to commence on July 1, 2025.
Previous wording
Virginia Procurement—Medicaid. In the first quarter of 2024, the Virginia Department of Medical Assistance Services (“DMAS”) issued a notice of intent to award which did not include Molina Healthcare of Virginia as an awardee for its Cardinal Care Managed Care (“CCMC”) procurement. We exercised our right to protest that decision. On April 19, 2024, DMAS upheld its notice of intent to award in response to our protest. Molina intends to file a legal action in Virginia District Court over DMAS’s decision not to award Molina a CCMC contract. In addition, DMAS separately notified us that they were exercising the contractual extension option for the period from July 1, 2024 through June 30, 2025. Despite the extension, subject to a 90-day advance notice obligation, DMAS retains its right to terminate the contract for convenience in order to transition members to the new CCMC contracts.
Current wording
Virginia Procurement—Medicaid. In the first quarter of 2024, the Virginia Department of Medical Assistance Services (“DMAS”) issued a notice of intent to award which did not include Molina Healthcare of Virginia as an awardee for its Cardinal Care Managed Care (“CCMC”) procurement. We exercised our right to protest that decision. On April 19, 2024, DMAS upheld its notice of intent to award in response to our protest. On April 26, 2024, Molina filed a legal action in Virginia Circuit Court over DMAS’s decision not to award Molina a CCMC contract. In addition, DMAS separately notified us that they were exercising the contractual extension option for the period from July 1, 2024 through June 30, 2025. Despite the extension, subject to a 90-day advance notice obligation, DMAS retains its right to terminate the contract for convenience in order to transition members to the new CCMC contracts.
Previous wording
Nebraska Procurement—Medicaid. Our new contract with the Nebraska Department of Health and Human Services commenced on January 1, 2024, which added approximately 111,000 members.
Current wording
Nebraska Procurement—Medicaid. Our new contract with the Nebraska Department of Health and Human Services commenced on January 1, 2024, which added approximately 112,000 members.
Previous wording
As of March 31, 2024, we served approximately 5.7 million members eligible for Medicaid, Medicare, and other government-sponsored healthcare programs for low-income families and individuals, including Marketplace members, most of whom receive government premium subsidies.
Current wording
As of June 30, 2024, we served approximately 5.6 million members eligible for Medicaid, Medicare, and other government-sponsored healthcare programs for low-income families and individuals, including Marketplace members, most of whom receive government premium subsidies.
Previous wording
We currently have reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other.
Current wording
We currently have four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other.
Previous wording
The following table summarizes our membership by segment as of the dates indicated:
Current wording
The following table sets forth our membership by segment as of the dates indicated:
Previous wording
The following table summarizes premium revenue, medical margin, and MCR by segment for the periods indicated (dollars in millions):
Current wording
The following tables summarize premium revenue, medical margin, and MCR by segment for the periods indicated (dollars in millions):
Previous wording
Medicaid premium revenue increased $1.1 billion, or 18%, in the first quarter of 2024, when compared with the first quarter of 2023. The increase was mainly due to the membership impact of the Iowa contract that commenced in July 2023, the My Choice acquisition that closed in the third quarter of 2023, and contract wins in Nebraska and California that commenced on January 1, 2024, partially offset by the impact of Medicaid redeterminations and minimum MLR and medical cost corridors.
Current wording
Medicaid premium revenue increased $893 million, or 14%, in the second quarter of 2024, when compared with the second quarter of 2023. Medicaid premium revenue increased $2.0 billion, or 16%, in the six months ended June 30, 2024, when compared with the six months ended June 30, 2023. The higher premium revenue reflects new contract wins, including the Iowa contract that commenced in July 2023, and the Nebraska and California expansion that commenced on January 1, 2024, and the My Choice acquisition that closed in the third quarter of 2023. These increases were partially offset by the impact of Medicaid redeterminations.
Previous wording
The medical margin in our Medicaid program increased $41 million, or 6%, in the first quarter of 2024 when compared with the first quarter of 2023. The improvement was driven by increased premium revenues and margin associated with the membership growth discussed above, partially offset by an increase in the MCR.
Current wording
The medical margin in our Medicaid program decreased $73 million, or 10%, in the second quarter of 2024 when compared with the second quarter of 2023, and decreased $32 million, or 2%, in the six months ended June 30, 2024 when compared with the six months ended June 30, 2023. The decrease in both periods was driven by an increase in the MCR, as discussed below, partially offset by increased premium revenues and margin associated with the membership growth discussed above.
Previous wording
The Medicaid MCR increased to 89.7% in the first quarter of 2024, from 88.4% in the first quarter of 2023, or 130 basis points. The increase was mainly attributable to the expected higher initial MCR associated with the start of new contracts and recent acquisitions, and a modest acuity impact from Medicaid redetermination. These increases were partially offset by certain rate actions, minimum MLR and medical cost corridors, improved operations and medical cost management. The Medicaid MCR for the first quarter of 2024 is slightly above our long-term target range.
Current wording
The Medicaid MCR increased 250 basis points to 90.8% in the second quarter of 2024, from 88.3% in the second quarter of 2023, and increased 180 basis points to 90.2% in the six months ended June 30, 2024, from 88.4% in the six months ended June 30, 2023. The increase for both periods was mainly attributable to the expected higher initial MCR associated with the start of new contracts and the recent acquisition, and the acuity impact from Medicaid redetermination. Additionally, the MCR increase in the second quarter of 2024 includes a 70 basis point impact from a one-time retroactive premium adjustment in California related to the prior year. The increases in both periods were partially offset by minimum MLR and medical cost corridors, and medical cost management. Excluding the one-time, prior year premium adjustment, new contracts and the recent acquisition, our legacy Medicaid MCR in 2024 is moderately above our long-term target range.
Previous wording
Medicare premium revenue increased $396 million, or 38%, in the first quarter of 2024 when compared to the first quarter of 2023. The increase was primarily due to the Bright Health Medicare acquisition that closed on January 1, 2024, the impact of MAPD and D-SNP membership expansion and organic membership growth in existing states.
Current wording
Medicare premium revenue increased $397 million, or 38%, in the second quarter of 2024 compared to the second quarter of 2023, and increased $793 million, or 38%, in the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increases were primarily due to the Bright Health Medicare acquisition that closed on January 1, 2024, the impact of MAPD and D-SNP membership expansion and organic membership growth in existing states, and increased premiums that are more commensurate with the acuity of our population.
Previous wording
The medical margin in Medicare increased $37 million in the first quarter of 2024, when compared with the first quarter of 2023, mainly due to margin associated with the year-over-year growth in membership and premium revenues, partially offset by the increase in MCR discussed below.
Current wording
The medical margin for Medicare increased $104 million in the second quarter of 2024, and increased $141 million in the six months ended June 30, 2024, when compared to the same periods in 2023. The increase in both periods was mainly due to the year-over-year growth in membership and premium revenues combined with the decrease in MCR discussed below.
Previous wording
Marketplace premium revenue in the first quarter of 2024 increased $80 million, compared with the first quarter of 2023, due to an expected increase in membership, and changes in member mix. Our Marketplace membership as of March 31, 2024 amounted to 346,000 members, representing an increase of 75,000 members compared to March 31, 2023, which is in line with our product and pricing strategy to achieve growth, while maintaining target margins in this segment.
Current wording
Marketplace premium revenue increased $114 million in the second quarter of 2024 compared to the second quarter of 2023, and increased $194 million in the six months ended June 30, 2024 compared to the six months ended June 30, 2023, mainly driven by an increase in membership. Our Marketplace membership as of June 30, 2024, amounted to 386,000 members, representing an increase of 117,000 members compared to June 30, 2023, which is in line with our product and pricing strategy to achieve growth, while maintaining target margins in this segment.
Previous wording
The Marketplace medical margin decreased $2 million in the first quarter of 2024, when compared with the first quarter of 2023, primarily due to the increase in the MCR discussed below, partially offset by the increase in premiums and margin associated with membership growth.
Current wording
The Marketplace medical margin increased $43 million in the second quarter of 2024 when compared with the second quarter of 2023, and increased $41 million in the six months ended June 30, 2024 when compared with the six months ended June 30, 2023. The change is primarily due to the increase in premiums and margin associated with membership growth and the impact of MCR changes discussed below.
Previous wording
The Marketplace MCR increased to 73.3% in the first quarter of 2024, from 68.6% in the first quarter of 2023. The increase resulted mainly from our product and pricing strategy to achieve growth and changes in membership mix discussed above. Our first quarter Marketplace MCR is in line with our full year expectations and consistent with seasonality patterns. Silver metal tier products incur less MCR seasonality than bronze metal tier products due to lower deductibles.
Current wording
The Marketplace MCR decreased to 71.6% in the second quarter of 2024, compared to 73.7% in the second quarter of 2023, or 210 basis points, and increased to 72.4% in the six months ended June 30, 2024, compared to 71.2% in the six months ended June 30, 2023, or 120 basis points. The changes in both periods reflect our product and pricing strategy to achieve growth, changes in membership mix discussed above, continued operational improvements, and risk adjustment premiums that are more commensurate with the acuity of our membership. The Marketplace MCR for the six months ended June 30, 2024 is in line with our full year expectations and consistent with seasonality patterns. Silver metal tier products incur less MCR seasonality than bronze metal tier products due to lower deductibles.
Previous wording
The Other segment includes service revenues and costs associated with long-term services and supports consultative services we provide in Wisconsin, and also includes certain corporate amounts not allocated to the Medicaid, Medicare, or Marketplace segments. Such amounts were immaterial to our consolidated results of operations in the first quarters of 2024 and 2023, respectively.
Current wording
The Other segment includes service revenues and costs associated with long-term services and supports consultative services we provide in Wisconsin, and also includes certain corporate amounts not allocated to the Medicaid, Medicare, or Marketplace segments. Such amounts were immaterial to our consolidated results of operations for the three and six months ended June 30, 2024 and 2023.
Previous wording
Our regulated health plan subsidiaries are each subject to applicable state regulations that, among other things, require the maintenance of minimum levels of capital and surplus. We continue to maintain levels of aggregate excess statutory capital and surplus in our regulated health plan subsidiaries that we believe are appropriate. See further discussion under “Regulatory Capital and Dividend Restrictions” below. When available and as permitted by applicable regulations, cash in excess of the capital needs of our regulated health plan subsidiaries is generally paid in the form of dividends to our parent company to be used for general corporate purposes. In the three months ended March 31, 2024, the parent company received $110 million in dividends and return of capital from the regulated health plan subsidiaries. See further discussion of dividends below in “Future Sources and Uses of Liquidity—Future Sources.”
Current wording
Our regulated health plan subsidiaries are each subject to applicable state regulations that, among other things, require the maintenance of minimum levels of capital and surplus. We continue to maintain levels of aggregate excess statutory capital and surplus in our regulated health plan subsidiaries that we believe are appropriate. See further discussion under “Regulatory Capital and Dividend Restrictions” below. When available and as permitted by applicable regulations, cash in excess of the capital needs of our regulated health plan subsidiaries is generally paid in the form of dividends to our parent company to be used for general corporate purposes. In the second quarter and the six months ended June 30, 2024, the parent company received $175 million and $285 million, respectively, in dividends and return of capital from the regulated health plan subsidiaries. See further discussion of dividends below in “Future Sources and Uses of Liquidity—Future Sources.”
Previous wording
Parent company liquidity requirements generally consist of payment of administrative costs not directly incurred by our regulated operations, including, but not limited to, staffing costs, lease payments, branding and certain information technology services; capital contributions paid to our regulated health plan subsidiaries, including funding for newer health plans; capital expenditures; debt service; funding for common stock purchases, acquisitions and other growth-related activities; and federal tax payments. In the three months ended March 31, 2024, the parent company contributed capital in the aggregate amount of $229 millionto our regulated health plan subsidiaries to satisfy statutory capital and surplus requirements and to fund growth in California health plans acquired in the Bright Health Medicare acquisition and our Iowa and Nebraska health plans. Our parent company normally meets its liquidity requirements from administrative services fees earned under administrative services agreements; dividends received from our regulated subsidiaries; federal tax payments collected from the regulated subsidiaries; proceeds received from the issuance of debt and equity securities; and cash flows from investing activities, including investment income and sales of investments.
Current wording
Parent company liquidity requirements generally consist of payment of administrative costs not directly incurred by our regulated operations, including, but not limited to, staffing costs, lease payments, branding and certain information technology services; capital contributions paid to our regulated health plan subsidiaries, including funding for newer health plans; capital expenditures; debt service; funding for common stock purchases, acquisitions and other growth-related activities; and federal tax payments. In the second quarter and six months ended June 30, 2024, the parent company contributed capital in the aggregate amount of $46 million and $275 million, respectively, to our regulated health plan subsidiaries to satisfy statutory capital and surplus requirements and to fund growth in California health plans acquired in the Bright Health Medicare acquisition and our Iowa and Nebraska health plans. Our parent company normally meets its liquidity requirements from administrative services fees earned under administrative services agreements; dividends received from our regulated subsidiaries; federal tax payments collected from the regulated subsidiaries; proceeds received from the issuance of debt and equity securities; and cash flows from investing activities, including investment income and sales of investments.
Previous wording
Cash, cash equivalents and investments at the parent company amounted to $194 million and $742 million as of March 31, 2024, and December 31, 2023, respectively. The decrease as of March 31, 2024, was primarily due to funding our Bright Health Medicare acquisition for $441 million, and capital contributions to regulated health plan subsidiaries, partially offset by the timing of corporate payments, and dividends received from regulated health plan subsidiaries.
Current wording
Cash, cash equivalents and investments at the parent company amounted to $235 million and $742 million as of June 30, 2024, and December 31, 2023, respectively. The decrease as of June 30, 2024, was primarily due to funding our Bright Health Medicare acquisition for $441 million, and capital contributions to regulated health plan subsidiaries, partially offset by the timing of corporate payments, and dividends received from regulated health plan subsidiaries.
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