Last month, we examined what recent payer investor meetings tell us about the future of health insurance. Today, we’ll take a look at four health insurers’ end-of-year investor calls to see what they say about the 2022 health insurance industry outlook.
Before we look at specific companies, here’s a broad overview of common themes:
- Revenue for most was up double digits, with most reporting revenue growth somewhere between 10% and 16%.
- Customer experience improvements and operational improvements dominated the conversations. Health insurers continue to invest in technology, like cloud-based call center infrastructure, artificial intelligence, or health insurance premium billing platforms. Whether it’s to attract new members, retain existing members, or drive down operational costs, digital transformation continues to drive insurance company spending.
- COVID-19 has not only impacted health insurers’ bottom line — many discussed the earnings headwinds they faced in 2021 as a result of COVID-19 — but also may impact their employment practices in the future. Two insurers mentioned that they are reevaluating their real estate in response to COVID-19. One indicated that the transition to remote work has already improved their recruiting efforts. Others are investing in technology to make that transition to remote work easier.
- Insurers expect revenue growth to continue. Most insurers mentioned their expectations for 2022 being in the same double-digit growth range they experience in 2021.
- Multiple insurers indicated they plan stock buybacks in 2022.
Here’s a brief look at four health insurers’ annual earnings reports:
Date: January 26, 2022
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Anthem reported a healthy 16% year-over-year increase in earnings per share for 2021. In addition, the company saw an increase of 2.4 million members, representing 6% year-over-year growth. They credited investments in enhancing the customer experience, delivering innovative whole health solutions, and deepening digital engagement as primary drivers of growth.
Anthem cited their digital transformation as one way they’ve improved digital engagement. That led to an amazing 150% increase in digital registrations during their peak onboarding period. The company has also invested in artificial intelligence, which has helped personalize the member experience while reducing administrative tasks. The company indicated that it had saved 1000 emergency room visits in a single month by predicting health events and leveraging virtual care options to address those events.
Another highlight: The company has invested in a Whole Health Index designed to help members live healthier lives by identifying local, social, and clinical health drivers. For example, the company identified five Medicaid states where obesity is especially severe and has designed programs to intervene. They foresee the Index enabling better identification of areas to intervene, driving down costs.
Finally, much of the discussion during the analyst Q&A on the earnings call focused on COVID-19 and expected costs in 2022. Anthem had estimated previously that in 2021 they’d face a COVID-19 headwind in the range of $600 million. Though they weren’t specific for 2022 COVID-19 cost estimates, the company overall thought the headwind would be smaller in 2022 compared to 2021.
Date: Feb. 2, 2022
Like Anthem, Humana had a strong financial year in 2021, announcing adjusted earnings per share increased by 11%. The company also touted that 97% of their Medicare Advantage members are in plans rated 4 stars or higher and that their Net Promoter Score increased 930 basis points in 2021.
Unlike Anthem, in their investor call, Humana focused on building internal efficiencies. Humana highlighted its initiative to drive $1 billion of additional value through several methods. They plan to review their strategic initiatives across the company and invest in those with the greatest value return. They also plan to streamline their operational structure, standardize work and simplify processes to eliminate work. Finally, they’re reviewing their third-party spend, potentially decreasing engagements with third-party vendors or spending more with high-value vendors.
The company did briefly discuss accelerating their digital capabilities to improve member acquisition and the member experience, though that conversation related to their sales capabilities.
On the COVID-19 front, Humana also mentioned COVID-19 headwinds amounting to roughly $1 per share in 2021. The company’s 2022 guidance includes that same $1 per share headwind. Humana also indicated that COVID-related utilization was higher than expected in 2021 thanks to the emergence of the Omicron variant. They also found a corresponding reduction in non-COVID utilization through the end of 2021.
Date: January 19, 2022
UnitedHealth Group reported revenue grew $30.5 billion in 2021, an 11.8% increase year-over-year. The company reported that the total number of people served grew by 2.2 million in 2021 in large part thanks to growth in Medicare Advantage and Dual Special Needs Plans (D-SNP) and the broader Medicaid market.
UnitedHealth Group focused on its five growth areas: value-based care, health benefits, health technology, health financial services, and pharmacy services. As the largest insurer in the US, the company is uniquely positioned to attack the healthcare system from multiple fronts to provide an integrated healthcare experience. They specifically highlighted their value-based care model, to which they will add roughly half a million members in 2022.
From a COVID perspective, UnitedHealth Group highlighted that they were seeing a slowdown in primary care, elective visits, and procedural volumes during Omicron’s peak. Specifically, they experienced a roughly 10% decrease in primary care visits in January and a higher decline in specialist visits.
Date: Feb. 8, 2022
Like other public insurers, Centene reported a double-digit revenue increase, experiencing $126 billion in revenue in 2021, a 13% increase year-over-year. Centene attributed that revenue growth to Medicaid membership growth due to the suspension of eligibility redeterminations during the COVID-19 public health emergency, membership growth in their Medicare business, a couple of acquisitions, the repeal of the health insurer fee, and new contracts in North Carolina.
Like Humana, Centene has focused on operational improvements. One way they expect to improve the member experience is through call center standardization. They have begun process mapping and transitioning their call center telephony infrastructure to the cloud.
Though Centene didn’t discuss the headwinds they faced as a result of COVID-19 like other insurers, they did discuss the impacts they’ve seen as a result of COVID. They saw inpatient authorizations climb and peak in mid-January. They found the average length of stay and cost per admittance lower for the Omicron variant than other variants.
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