Anthem reported higher revenue and profit in the first quarter of 2019 as it grew membership across its business lines.
The Indianapolis-based health insurer experienced the fastest growth in its government-funded programs.
Its Medicare Advantage membership, including Medicare supplement plans, rose 15.6% to a little more than 2 million in the three months ended March 31 compared with the same period a year ago, driven by supplemental benefits.
Anthem CEO Gail Boudreaux said Wednesday during a conference call with investment analysts that the company launched a package of benefits in which Advantage customers can receive healthy meals, transportation, adult daycare or in-home personal care. She said she expects Medicare Advantage to grow by 20% over the full year. Meanwhile, Medicaid membership grew 8.9% to 7 million.
But Anthem executives on Wednesday were more excited about a turnaround in the commercial business. Rebounding from a year-over-year decline in the first quarter 2018, Anthem's fully insured enrollment grew by more than 900,000, or 6.5%, while fee-based membership grew less than 1%. Risk-based membership brings in higher payments than fee-based business.
"We feel very good about our commercial growth this quarter and quite frankly our projections for the full year," Boudreaux said.
She said the risk-based membership growth was the strongest the company has seen in a decade. The company grew its commercial membership by "developing a broad suite of new consumer products and making it easier for our customers and brokers to do business with us," she explained.
Anthem improved its employer shopping portal and digital broker tools. It also is strengthening its value-based relationships with clinicians and seeing more traction with its specialty products and clinical wellness programs, Boudreaux said. She noted that she expects 58% of Anthem's medical spend to be tied to value-based care by the end of 2019, up from 49% in 2017. Anthem also expects 30% of value-based care to be tied to shared-savings programs this year, up from 24% in 2018.
Still, the commercial and specialty business as a whole is growing slowly. It increased 0.9% in the quarter to 300.2 million compared with the same period a year ago. That said, it makes more money: margins in the commercial and specialty segment are much higher at 16.9% compared to 2.6% in the government health plans.
Anthem posted an operating gain of $1.6 billion in its commercial and specialty segment, an increase of 12.6%, because of lower medical costs among its local employer customers and higher administrative fee revenue in the self-funded businesses.
It recorded an operating gain of $383 million in its government programs, down 20.4% year over year, driven by higher medical costs in Medicaid in some states and the non-recurrence of retroactive revenue adjustments received in 2018, the company said.
In total, Anthem's membership was 40.8 million at the end of the quarter, an increase of 2.9%.
Its first quarter revenue increased 9.4% to $24.7 billion and its net income totaled $1.6 billion, an increase of 18.2%.
Anthem's medical loss ratio, or the amount of premiums spent on medical claims and quality improvement activities, rose to 84.4% from 81.5% during the same quarter a year ago. Anthem said the increase occurred because of the suspension of the health insurer fee this year.
Correction: It was Anthem's fully insured enrollment that grew by more than 900,000, or 6.5%, in the first quarter. An earlier version of this story misstated the type of enrollment.