// . //  Insights //  Health Insurance Financial Pulse — Q1 2024 Public Companies

Welcome to the latest edition of our health insurer financial update, Pulse. We aim to keep you informed about key market trends and dynamics that impact health insurer financial results and profitability. Earlier this year, we released our analysis of Q4 2023 financials. This update contains Q1 2024 net income trends for insured business, earnings highlights, commercial and Medicaid membership (including redeterminations), and market capitalization highlights.

Six key trends for selected public health insurers Q1 2024

Average profit margins decreased due to UnitedHealthcare’s Brazil sale

There was a 2% drop in profit margin from both Q4 2023 and Q1 2023 driven by UnitedHealthcare’s $7.1 billion recognized loss from the sale of its Brazil business.

Seasonal decrease in loss ratio, CVS health (AETNA) reports deterioration

Average loss ratios decreased compared to Q4 2023, consistent with seasonal patterns, but they were higher than Q1 2023. CVS Health (Aetna) also reported loss ratio deterioration, primarily driven by its Medicare Advantage business.

Lower operating expense ratios contribute to profit margins

Reported operating expense ratios were the lowest since Q2 2022.

Continued decline in Medicaid membership due to eligibility redeterminations

Medicaid membership continued to decrease due to the impact of eligibility redeterminations - some of these members migrated to Commercial products. Several insurers indicated that they believed they were about 90% complete with the redetermination process at the end of Q1 2024.

Market capitalization reduction for Humana and CVS Health (Aetna)

As of March 29, 2024, Humana had lost roughly one-quarter of its market capitalization since the end of 2023. CVS Health (Aetna) also saw a reduction in its market capitalization following the release of its Q1 2024 earnings (not shown in this article).

No material financial impact reported from cyber threat

The Change Healthcare cyberattack did not significantly impact UnitedHealthcare’s Q1 2024 financials.

Net income for public health insurers showed mixed results compared to Q4 2023

Overall, the unweighted average profit margin (net income/premium) for the four insurers of 3.2% is 1.9% lower than the Q4 2023 unweighted average, and 2.3% lower than the Q1 2023 unweighted average of 3.6%, which was driven by UnitedHealthcare’s reported loss due to a divestiture.

UnitedHealthcare recorded a net loss in Q1 2024, with a profit margin that dropped from 5.8% in Q4 2023 to -1.4% in Q1 2024, driven by a $7.1 billion recognized loss on the sale of their Brazil subsidiary. Excluding the extraordinary item, UnitedHealthcare’s Q1 2024 margin would be like Q4 2023.

Cigna also saw their margin decrease in Q1 2024, from 11.7% in Q4 2023 to 8.0% in Q1 2024, however, Cigna’s Q4 2023 was inflated due to the recognition of deferred tax benefits.

Elevance’s profit margin increased by 3.4% from Q4 2023 to Q1 2024, primarily driven by a lower benefit expense ratio.

CVS Health (Aetna) saw their profit margin relatively unchanged from Q4 2023 at 0.9%, only increasing by 0.2% in Q1 2024. Their profit margin was also 3.1% lower than the Q1 2023 reported margin of 4.0%.

Exhibit 1: Net income % of premium

Average loss ratios decreased in Q1 2024 versus Q4 2023, but 1.5% higher than Q1 2023

On average, the medical loss ratios (medical costs/premium) for all four of the public large companies that we reviewed were 1.2% lower from Q4 2023 to Q1 2024.

In Q1 2024, reported loss ratios were 85.6% for Elevance, 90.4% for CVS Health (Aetna), 84.3% for UnitedHealthcare, and 79.9% for Cigna.

Loss ratios are impacted by seasonal patterns, and it is not uncommon to see a lower Q1 loss ratio than the prior Q4. Overall, the unweighted average loss ratio was 1.5% higher in Q1 2024 at 85.0% compared to Q1 2023 at 83.5%. This increase was driven by UnitedHealthcare (82.2% to 84.3%) and CVS Health (Aetna) (84.6% to 90.4%).

Exhibit 2: Medical loss ratio

Average Q1 2024 operating expense ratios were the lowest reported since Q2 2022

Operating expense ratios (operating expense/premium) decreased by 0.8% from Q4 2023 to Q1 2024. Cigna (-0.4%), CVS Health (Aetna) (-1.9%), and Elevance (-1.2%) all reported decreases, while UnitedHealthcare increased by 0.3%.

Exhibit 3: Operating expense ratio

Most firms’ Q1 2024 utilization met expectations, except CVS Health (Aetna)

Many carriers commented on the utilization trends they saw during Q1 2024, noting that overall utilization is generally in line with expectations.


Health benefits ratio for the quarter was 87.1%, which was on track with full year guidance. Breaking it down by line of business, Centene noted that they experienced a health benefit ratio of 90.9% within Medicaid, slightly worse than expectations. Medicare’s HBR in the quarter was 90.8% which was in line with expectations, and Commercial’s HBR was 73.3%, slightly better than expectations.


Medical care ratio was better than expectations in the quarter at 79.9%, driven by CIGNA’s focus on affordability initiatives and effective pricing execution. Full-year MCR is expected to be in the range of 81.7% to 82.5%, an improvement of 20 basis points from the high end of the prior range. Additionally, CIGNA expects that their second quarter medical care ratio to be within their full year guidance range.

CVS Health (Aetna)

Reported medical benefit ratio of 90.4% in the quarter, which was 580 basis points higher than the prior year quarter, primarily reflecting higher Medicare Advantage utilization, the premium impact of lower Stars Ratings for payment year 2024, and unfavorable prior year development as compared to the prior year. CVS Health (Aetna) (expect that their 2024 medical benefit ratio to be approximately 89.8%, an increase of 210 basis points from previous guidance.


Elevance experienced a benefit expense ratio of 85.6% within the quarter, which was in line with expectations.


Reported a benefit expense ratio of 88.9% for the quarter, which was in line with expectations. For January and February, Humana did see slightly higher inpatient utilization, however, this was offset by favorability in late February and throughout March.


Saw a business-wide medical cost ratio of 88.5% for the quarter which was in line with expectations. Medicaid business continued to show strong margins and experienced a medical cost ratio of 89.7%. Medicare Advantage saw a medical cost ratio of 88.7% for the quarter. Molina noted that the higher utilization they experienced in the second half of 2023 due to higher Long-Term Services and Supports costs and pharmacy utilization continued into 2024, however, the operational improvements and supplemental benefit adjustments that were made in their legacy business appeared to have been successful in offsetting the costs associated higher utilization. The medical cost ratio for Molina’s Marketplace business was 73.3% in the quarter, also in line with expectations. Molina is projecting their full year consolidated MCR to be 88.2%.


Reported a medical care ratio was 84.3% for the quarter. This reflects a roughly 40 basis points increase related to the temporary suspension of some care management activities. UnitedHealthcare did not reflect any favorable earnings impacting medical reserve development in the quarter. Due to the potential for the cyberattack to affect claims receipt timing, they did reflect an additional $800 million of claims reserves. Outpatient care activity among seniors remained consistent with the elevated levels that were first seen in the first half of 2023, and which were planned for within 2024 Medicare Advantage benefit offerings. Overall inpatient care activity also fell within expectations.

Q1 2024 Medicaid membership declines, while Commercial enrollment increases

In Q1 2024, total Medicaid membership for public carriers decreased by 4.9% from Q4 2023, driven by the continued redetermination of Medicaid eligibility. However, total Medicaid enrollment is still about 25% higher than at the beginning of the pandemic. Total Commercial membership increased roughly 3.0% over Q4 2023, as some individuals who lost Medicaid coverage were able to shift to Commercial coverage.

During their earnings calls, most carriers provided insight into their year-to-date membership performance. In addition, some carriers also commented on the ongoing process of states redetermining Medicaid eligibility. The Public Health Emergency officially ended on May 11, 2023, with several states beginning the redetermination process on April 1, 2023.


The quarter ended the quarter with approximately 13.3 million members, slightly surpassing the expected 13.2 million members. This was primarily driven by timing of the redetermination process. Centene estimates they were 90% of the way through this process by the end of the quarter. Notably, Commercial business saw growth from 3.9 million marketplace members at year-end to 4.3 million at the end of the first quarter.


The first quarter ended with approximately 19.2 million medical customers, representing a reduction of 0.6 million members since the end of 2023. This was primarily driven by a reduction within their Individual Exchange enrollment following the repositioning of their book in certain geographies to improve overall profitability.

CVS Health (Aetna)

The quarter concluded with a medical membership of approximately 26.8 million, an increase of 1.1 million members compared to year-end 2023. This reflects growth in Medicare, Individual Exchange, and Commercial group products, partially offset by the impact of Medicaid redeterminations.


They ended the quarter with medical membership of approximately 46.2 million members. This reflects attrition in Medicaid, partially offset by ongoing momentum in their commercial business. During the quarter, Elevance added nearly 400,000 Commercial fee-based members, driven by strong retention and a successful national account selling season. They also added more than 200,000 Individual ACA members based on attractive product positioning and coverage transitions away from Medicaid. Elevance believes that nearly 90% of their Medicaid membership have already had their eligibility redetermined.


The quarter ended with approximately 16.2 million members, a decrease of roughly 800,000 from year-end 2023. This was driven by a decrease of approximately 600,000 members in Medicare Stand-Alone PDP products. Based on these first quarter results, Humana increased their full-year individual Medicare Advantage membership expectations by 50,000 to 150,000.


In the quarter, Molina’s Medicaid enrollment decreased by 50,000 members due to the net impact of Medicaid redeterminations. So far, Medicaid enrollment is down 550,000 due to the effect of redeterminations. Molina expects to lose an additional 50,000 members in Q2 2024 due to redeterminations, reaching a total estimated loss of 600,000 members. Overall, they’ve been able to transfer roughly 30% of the lost Medicaid enrollment into their marketplace products.


UnitedHealthcare added 2.1 million new consumers in the first quarter. Medicaid business ended the first quarter with 7.7 million members, slightly below where it was at the end 2023 reflecting attrition due to Medicaid redeterminations.

The chart below displays the changes in reported enrollment for the 16 most recent quarters for Commercial and Medicaid for a set of public companies where counts were available on a consistent basis. In the quarter, total Commercial membership increased by about 2.8 million, while Medicaid membership decreased by approximately 2.0 million in the quarter due largely to the eligibility redetermination process.

Exhibit 4: Changes in reported enrollment

Health plan capitalization increased over the past year, but declined and trailed the S&P 500 Index growth in Q1 2024

From Q1 2021 to Q1 2024, the collective market capitalization of the seven public healthcare companies we monitor experienced modest growth. Between March 31, 2021, and March 29, 2024, the combined market capitalization of these seven public health plans rose by 22.1%. During the same period, the S&P 500 index grew by 32.3%, outpacing the healthcare companies by 10.2%. However, despite the substantial overall gain by the health plans, there was a noticeable divergence in market capitalization of healthcare firms compared to the S&P 500 Index in the last quarter. From Q4 2023 to Q1 2024, the market capitalization of the seven public companies dropped by 1.8%, while the S&P 500 index increased by 10.2% over the same period.

Exhibit 5: Market capitalization — public healthcare companies

Healthcare company stock performance experienced considerable variation in Q1 2024 returns

Cigna and Humana both outpaced the S&P 500 Index (+10.2%), with share price gains of 17.6% and 14.3%, respectively. Humana’s share price dropped significantly (-25.8%), primarily due to investor concerns about medical costs and Medicare Advantage reimbursement. UnitedHealthcare also dropped in Q1 2024 (-6.3%), largely a reaction to subsidiary Change Healthcare’s cyber-attack. CVS Health’s (Aetna) share price was flat (-1.2%) but decreased substantially following its Q1 2024 earnings release, while Centene (+5.9%) and Elevance (+8.9%) saw gains which were lower than the S&P 500 Index.

Exhibit 6: Change in market capitalization — public healthcare companies

Look out for the Pulse Q2 2024 financials in the next quarter.