Anthem: Only 0.5% net ACA exchange attrition since March

Hat Tip To: 
Jed Graham

Right on top of the Humana SEC filing I just wrote about comes this Q2 earnings conference call with Joe Swedish of Anthem (formerly WellPoint), which is an even larger insurance company nationally:

Our growth continues to be balanced so far in 2015 as we added 571,000 Medicaid members, 331,000 national members, 51,000 individual members and 16,000 local group members. As a reminder, we closed on the Simply Healthcare acquisition in February of this year, which contributed 209,000 members. These results have been supported by strong operating cash flow of $2.8 billion year-to-date, which represents 1.6 times net income.

I'd like to start by discussing our Commercial business. Commercial membership has increased by 398,000 since year-end 2014. Revenues remain relatively flat in the second quarter, but have declined by roughly 6% since the prior-year quarter to $9.4 billion, primarily due to fully insured member declines, including the previously announced decision to discontinue our employer group Medicare offering in the state of Georgia account.

Self-funded membership trends have been encouraging, increasing by 710,000 versus year-end 2014. This was primarily driven by better than expected growth in our large group business. Large group and small group insured membership in the Commercial business remained relatively flat in the quarter as expected. Small group ended the quarter with a total membership of 1.35 million.

Individual membership declined by 51,000 during the quarter as we continue to see contraction in our legacy non-metal products and metal products off of the public exchanges. Our exchange membership declined by 5,000 lives to 893,000 members, which was due to normal attrition outside of open enrollment and was slightly better than expectations.

OK, so what does this mean?

Well, first of all, effectuated ACA exchange enrollments as of 3/31/15 were exactly 10,187,197. Thanks mainly to the 214,000 people who selected private policies during the #ACATaxTime special enrollment period, I've been estimating this number to be more like 10.3 - 10.4 million over the summer, which would be about a 1.6% net increase. In Anthem's case, this should have meant them gaining roughly 14,000 members. Instead, they lost 5K (a 0.55% decrease).

Anthem holds around 9% of total exchange enrollments. If this is representative nationally, that would mean that 6/30/15 exchange enrollments nationally are down to around 10.13 million. However, there's still enough uncertainty here for me to hold off before admitting to being wrong about the slight increase; other insurers may have made up the slack.

Anyway, at worst, if you include roughly 19,000 additional enrollees via the #ACATaxTime period (9% of 214K = 19.2K), this means a mere 2.6% net attrition rate over a 3 month period. This is much better than last year, when the monthly attrition rate was more along the lines of 3% per month, give or take.

Unfortunately, unlike Humana, the Anthem story doesn't actually say how many off-exchange / legacy policies they have, only that this number dropped by 46,000 (51,000 minus the 5,000 lost from the ACA exchange).

I should also note that between Humana and Anthem, I now have hard 2nd Quarter (6/30/15) enrollment numbers for companies representing 1,564,400 exchange enrollees...or roughly 15 - 15.4% of the total.