瑞信-美股医疗保健行业-管理式医疗：2021年健康保险研讨会要点-2021.5.24-44正式版

24May2021EquityResearchAmericas|UnitedStatesManagedCare2021HealthInsuranceSymposium:AnsweringYourHealthInsuranceQuestions&MuchMoreManagedCare|AnnualOnThursday,May20th,sixindustryexpertsandconsultantspresentedatourvirtual2021HealthInsuranceSymposium.Thesymposiumcoveredavarietyoftopicsandwaswell-attendedbyinvestors.Weofferkeytakeawaysfromeachpresentationbelow,andamoredetaileddiscussioninthepagesthatfollow.KeyTakeawaysfromCommercialMarketSession&BenefitConsultantSession:DuringtheBenefitConsultantsession,ourpresenterindicatedthatin2021,ingeneral,healthcarecostsarecominginlowrelativetoexpectationsandcitedtrends0-5%belowexpectedlevelsrightnow.Hebelieves,however,thatthatcouldchangequicklyastheeconomyreopensandmorepeoplearecomfortablegoingbacktodoctors’offices.Lookingaheadtonextyear,ourconsultantbelievesfactorsarelikelytopushcosttrendshigher,astherewillbeafull12monthsofanopeneconomy,allowingpeopletocatchupwithsuppressedcare.Inall,thisconsultantbelievestrendswillaccelerateoverthenext18months.Regardingcosttrend,headvisedthat5-6%isagoodstartingpointbeforetakingintoconsiderationplandesignchangesandotherfactors,andnotedthatiswhatheisseeinginunderwritingwithlargeclientscurrently.Ingeneral,hebelievesthatthefactorswillpushcosttrendbackupin2022willoutweighfactorsthatsuppressit.Hecitedspecialtydrugsasthefastestgrowingcomponentofcosts,andhighlightedthat,whilelessthan2%ofthecommercialpopulationisusingaspecialtydrug,thesedrugsaccountfor50-60%oftotaldrugcosts(anddrugcostsare20%oftotalhealthcarecosts).DuringtheCommercialMarketsession,ourpresenterdiscussedfindingsfromaMarchsurveyindicatingthatemployerstookaconservativeapproachtoratesettingfor2021(despite61%beingunderbudgetforhealthbenefitcostsin2020),asthemeanprojectedcosttrendfor2021beforeplanchangesis4.4%(median:4.2%)andthemeancosttrendafterplanchanges(benefitbuydowns)is3.5%(median:3.0%).KeyTakeawaysfromtheMedicareUpdateSession:OurMedicareAdvantagepresenterisseeinga1-3%riskcodingheadwindformostplansin2021,generallyonthelower-endofthisrangeforthelargerplayersthathadmorerobustmitigatingeffortsaroundtelehealthandvirtualhealthriskassessments.ThisheadwindislargelyoffsettingtheHIFbenefitandleadingtorelativelymodestbenefitinvestmentsin2021.OurpresenteranticipatesthatMAorganizationsarepositionedwellin2021giventheHIFbenefit,theconservativismaroundbids,andmodestbenefitinvestment(onlymodestchangesinbenefitsyear-to-year).HeacknowledgesthattheCMSriskcodingupdatethatisreleasedinthesummer,whichhasmoreuncertaintythanusual,willbeimportantforMAplansindeterminingwhethertherewillbeback-halfupsidetonumber.Further,ourMAexpertexpectstoseestrongMAmarginsin2022.Planswilllikelybenefitfromapotentialcodingupliftfromthe2019and2020cohortsandfromamorenormalyearofriskcodingin2022,givenourpresenteranticipatesriskcodingwillbelargelycaughtupastheindustryexits2021.Marginswillalsobenefitfromahealthy4%benchmarkrateupdatein2022,asourpresenterhasnotseenanymeaningfulchangestothe2022rateproposalandthedeadlineforbids(June7)isapproachingfast.Anotherkeydriverinourpresenter’spositive

ResearchAnalystsA.J.Rice2123258134aj.rice@AlexanderKhan2123257714alexander.khan@RobertMoon2123257112robert.moon@DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.每日免费获取报告1、每日微信群内分享7+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、行研报告均为公开版，权利归原作者所有，起点财经仅分发做内部学习。扫一扫二维码关注公号回复：研究报告加入“起点财经”微信群。。marginoutlookisastableenvironmentforbenefitinvestment.Plansdonotwanttoaggressivelyimplementbenefitsthatproveunsustainable,andplansareuncertainaboutrateupdatesfor2023andbeyond.Relativelylowchurnoverthelastyearwillalsosupportmargins.KeyTakeawaysfromOurMedicaidSession:OurMedicaidpresenterdiscussedananalysisthatfoundthatMedicaidenrollmenthasgrownsubstantiallyacrossvariousstates,regardlessofeconomicperformance,whichhighlightstheimpactofpausedredeterminations.Withinthedataset,ourexperthighlightedthatcertainhigh-unemploymentstatessuchasHawaii,NewMexico,andNevada(with8.1-9.0%unemploymentrates)experiencedMedicaidenrollmentgrowthof20%,11%,and24%,respectively,ascomparedtoJanuary2020.Meanwhile,low-unemploymentstatessuchasSouthDakota,Nebraska,andIowa(2.9-3.7%unemploymentrates)experiencedgrowthof15%,35%,and17%respectivelyoverthesameperiod.Oftheapproximately12-15%overallgrowthinMedicaidenrollmentgrowthseenoverthepastyear,ourpresenterposits7-10%ofthegrowthisattributabletothelackofredeterminations.KeyTakeawaysfromPBMContractingSession:OurPBMContractingpresenterindicatedthatshehasnotseenasmanyRFPsthisyearasexpected.Instead,ourexperthasseenmorenumerouscontractamendmentnegotiations.Inthesenegotiations,thepartiesreviewfinancialmetricsandperformanceguarantees,buttypicallydonotdoafullmarketpricingcheckandreset.OurexpertsaysthatplansponsorsarenotcurrentlylookingatmakingseismicchangessuchasswitchingPBMsastheytrytoreopen.Ifthisiswidespread,itbodeswellforPBMsastheywouldnotberequiredtofullyredotheircontractsbutonlyimplementmarginalchanges.AsPBMprofitabilitygenerallyimproveseachyearacontractstaysinplace,thiscouldprovideagoodsetupforPBMsnextyear.KeyTakeawaysfromD.C.PolicyUpdateSession:OurD.C.consultantstatedthatthecontinuedeffortfordrugpricingreformbillisunlikelytobeaccomplishedthisyearaccordingtoconventionalwisdominWashington.However,whileintheminority,ourconsultantbelievesthatsomedrugpricereformlegislationcouldbeaddedtotheBidenAdministration'sproposed$4trillioninfrastructurepackage.HouseSpeakerNancyPelosipubliclystatedthatshewouldnolongerrunforHouseSpeaker,implyingthatherretirementfromCongressnears(2022).Asalong-timeproponentofdrugpricereform,ourconsultantbelievesthatPelosiwillworkhardtogetthisdone.However,topassontheDemocraticside,NewJerseyDemocraticSenatorRobertMenendezwillhaveastronginfluenceonwhetheritisincludedornot.Giventhe50/50Senatesplit,ifanonerouspharmasectionisincludedonthisbill,ourconsultantbelievesthepackagecouldlosesomeDemocraticvotesintheSenate.ThebottomlineisthatthemajorityconsensusinDCexpectsthatanydrugpricingreformbetweentheCentristDemocratsandbigpharmahasalreadylostmomentum121daysintotheBidenAdministration.24May2021TableofContentsTableofContents 3DetailedRecapofthe2021CreditSuisseHealthInsuranceSymposium 6BenefitConsultantUpdate 6EmployerBenefitsLandscape 6HealthEquity 6VirtualFirstOfferings 7RFPActivity 7PBMSellingSeason 7ImpactofRecentLegislation 7CostTrend 8AmazonInitiatives 8Buydowns/Co-PayandDeductiblePressures 8HighDeductibleHealthPlans(HDHPs) 8NarrowNetworks 9Technology-EnabledInsurers 9TrendGuarantees 9EmployeeDumping 9Self-FundedASOvs.Full-Risk 9BluesLitigation/Settlement 9CompetitiveLandscape 9MedicaidMarketUpdate 9MedicaidEnrollmentGrowthOverview 10COVID-19Impacts 10Procurements/Pipeline 11DetailsonCaliforniaRFP 12ManagedMedicaidPenetration,ExpansionOpportunities 12Redeterminations 12RiskCorridors 12RateOutlook 12CompetitiveLandscape 12FederalPolicy 13SocialDeterminantsofHealth/HealthEquity 13ProfitabilityCouldImprove 13ConsolidationOpportunities 13MedicareMarketUpdate 13IntroductionandOverview 13MARateUpdateandSequestrationImpact 13LowMemberChurnisBenefitingMargin 14ManagedCare 324May2021Re-DeploymentoftheHIF 14RiskCoding 152022MarginEnhancementOpportunity 17COVIDTestingandVaccinationunderMA 17MAStarRatings 18ThoughtsonMedPAC’sAssertionThatMAPlansAreOver-CodingandthePotentialFinancialImpactofIncreasedRADVAudits 18EndStageRenalDiseaseinMA 19TelehealthinMA 19MedicarePartDandStandalonePDPMarket 19DirectContracting 20DrugRebateRule 20TechnologyEnabledMAPlans 20WashingtonPolicyUpdate 21Overview 21H.R3Compromise 22LoweringtheAgeforMedicareEligibility 23EnhancingObamacare/ACAandMedicaid 23FundingforNIH 24ProviderRelief&SupportPostPandemic 24LikelihoodThatBenefitsIntroducedinPandemicContinue 24StatusofFillingKeyPositionsintheBidenAdministrationRelatingtoHealthcare 25CommercialMarketUpdate 25MarketUpdate:UnderstandingMedicalCosts/Trends 252022MedicalCostTrends 29HealthCareDeliveryStrategy 29VirtualCare 31PharmacyManagement 33RetireeMedical 35AppetiteforBundledArrangements 37EmployersandDirectContractingwithHealthSystems 37Tech-EnabledHealthPlans 37AbouttheSurvey 38PBMContracting 38ImpactofConsolidatedAppropriationsAct(2021) 38DOLCybersecurityChecklist 39ContractsAmendmentsvs.RFPs 39Pass-ThroughPricing 39SpecialMedicationFormularyFocus 39CopayandPatientAssistancePrograms 40ManagedCare 424May2021Employer-SponsoredTrendstoWatch40PBMRebates40PBMEconomics/Visibility40HomeDeliveryvs.RetailPrescriptions40ContractTriggers/Dynamics41Rutledge/SCOTUSRuling41ManagedCare524May2021DetailedRecapofthe2021CreditSuisseHealthInsuranceSymposiumOnThursday,May20th,sixindustryexpertsandconsultantspresentedatourvirtual2021HealthInsuranceSymposium.Thesymposiumcoveredavarietyoftopics,aslistedbelow,andwaswell-attendedbyinvestors.BenefitConsultantDiscussionErikBagin,SVP,HealthandBenefitsatAONMedicaidMarketUpdateAriGottlieb,PrincipalatA2StrategyGroupMedicareMarketUpdateTimMurray,DirectorandSeniorConsultingActuaryatWakelyDCPolicyUpdateEthanSiegal,FounderandAnalyst,TheWashingtonExchangeCommercialMarketUpdateMichaelPerlmutter,SeniorDirector,Health&BenefitsHealthImaginationLeader,NorthAmericaatWillisTowersWatsonPBMContractingVivianHunterTurner,PrincipalatGroomLawGroupBenefitConsultantUpdateWehostedErikBagin,SVP,HealthandBenefitsatAON,fortheBenefitConsultantUpdatesession.EmployerBenefitsLandscapeMr.Baginnotedthatpriortothepandemic,mostlargeorganizationswereveryfocusedonenhancingemployeeexperienceandvalueproposition,focusingon“nice-to-haves”aroundthefringesofbenefitsprograms,forexample.Thepandemichoweverhaschangedthefocusto“needs”vs.“wants”atthistime.Thatis,todaylargeorganizationsarefocusedonsafetyissuescomingthroughthepandemicandmorearoundemployeewell-beinganddiversityandinclusion,aswellfamilybuildingandsupport,mentalhealth,virtualcare,primarycareandprevention,andtimeawaypolicies.Thesearemorestrategicinnaturefromanorganizationalperspective,andourconsultantbelievesthosethingswillbelongerlasting.Fromaninsuranceperspective,forthemedicalandpharmacyside,ourexpertdoesnotseealotofchangeinthewayemployersarethinkingaboutthosethingsnow.Henoted,however,thatvirtualcareisaccelerating,andmanypointsolutionsarefocusedonusingtechnology;heseesarampinthatareaandbelievesthosewillcontinueoverthenearfuture.HealthEquityIntermsofhealthequity,Mr.BaginhighlighteddiversityandinclusioninitiativesandnotedthatorganizationsaretakingafreshlookateverythingtheyaredoingintheirbenefitprogramsandHRpolicies,andbringinginmoreemployeeresourcegroupstothedesignofprograms.Thereisalotofactivityandfocustodayaroundsuchprogramsasfamilybuildingandsupport(i.e.,infertility,surrogacy,adoption)acrossmostlargeorganizations.ManagedCare624May2021VirtualFirstOfferingsMr.Baginhighlightedthatanumberoflargehealthplansareoffering“VirtualFirst”or“VirtualDirected”healthplans,andcitedHUMandANTMasexamples.Hebelievesthatonamacrolevel,theenvironmentismovingoutoftheeraofconsumerismandintotheeraofvirtualhealthcare.Thosedesignsarenewtothemarket,and,thoughthereisnotalotofimplementationatthispoint,heexpectsittopickup.Mr.Bagincitedsomeindicatingthattheseofferingscangeneratesavingsof10-15%,andbelievesthattheseprogramswillbecomepartoflargeemployerlineupsthewaythatHDHPshaveoverthelast15years.Theseofferingsareaboutleveragingtechnology,whichhenotesisattractivetoyoungeremployees,whichcontinuestobecomeabiggershareoftheworkforce.Additionally,assomepeopledonotutilizemuchhealthcare,theywouldwanttoselectthelowestpaycheckdeductionoptionavailable,andwouldtherebychoosethelowestpriceplan,whichtheseplanscouldbecome.RFPActivityLargemarketorganizationstypicallystarttheirRFPprocess12-15monthsinadvanceoftheeffectivedate.ThattypicallybeginsinQ4(November/December),andbyMarchthoselargeorganizationsarewellintotheRFPprocess(infinalistmeetings)andfinalizedecisionsinAprilandMay.Inthelargemarket,volumehasbeenfairlysteady,whilelastyearmanylargecompaniesputchangesonholdbecauseofwhatemployeesweregoingthroughintermsofdisruption,andtheywantedtominimizeadditionalchange.Mr.Baginbelievesthatthisyearthatwillpickup,andRFPvolumemightbecomparableorslightlyup,andtherewillprobablybemorechangesthanlastyear.FortheMiddleandSmallmarkets,theirprocessesbeginslater.RFPvolumewasdownsignificantlylastyear,andthisyearshouldbeupintermsofvolumeandchanges,accordingtoourexpert.IntheLargeemployerself-insuredmarket,healthbenefitscontractsaregenerally3-5years.Insuredplanstypicallyreneweveryyear,butself-insuredplansareusuallyathree-yeardeal,withanoptiontoextendtofourorfive.PBMSellingSeasonMr.BaginnotedthathiscommentsaboutMedicalcontractrenewaltimeframesapplytoPBMsaswell.Forlargeorganizationsitisabigprocessandtheyneedtostartearlier,whilesmallerorganizationscanmovefasteranddonotneedasmuchtime.ImpactofRecentLegislationRegardingrecentlegislationthatpassedtoenhancesubsidesandeasequalificationsonthepublicexchanges,andintroduceenhancedCOBRAsubsidies,Mr.BaginindicatedthathehasnotyetseenadisruptiontotheCommercialmarketplacethisyearasaresult.HenotedthattherehasnothasbeenanydisruptionintheLargeemployermarket,andthereprobablywillnotbemuchimpactontheMiddleMarket.However,theremaybesomeimpactintheSmallemployermarket.Mr.Bagindiscussedthattheincreasedsubsidiesonlyapplytoindividualsifthatindividual’semployerdoesnotoffercoveragethatisofacertainvalueandacertainaffordability,andmostlargeorganizationsaredoingthosethings,sothoseemployeesarenoteligiblefortheincreasedsubsides.HenotedthattheCOBRAenhancementswillprobablyhavesomeimpact–organizationshavetogoback18monthstoseewhoiseligible,andhebelievesthattherewillbesomeadditionaltake-upandthatwilladdsomeadditionalcost.ManagedCare724May2021CostTrendMr.Baginindicatedthatin2021,ingeneral,healthcarecostsarecominginlowrelativetoexpectationsandcitedtrends0-5%belowexpectedlevelsrightnow.Hebelieveshoweverthatthatcouldchangequickly,asthecountrycontinuestoreopenandmorepeoplearecomfortablegoingbacktodoctors’offices.Goingintonextyear,factorsarepushingtrendshigherin2022,astherewillbeafull12monthsofanopeneconomyandpeoplecatchingupwithsuppressedcare.Inall,hebelievestrendswillaccelerateoverthenext18months.Regardingcosttrend,headvisedthat5-6%isagoodstartingpointbeforetakingintoconsiderationplandesignchangesandotherfactors,andnotedthatthatistypicallyhisexperienceinunderwritingwithlargeclients.Ingeneral,hebelievesthatthefactorsthatincreasecosttrendin2022willoutweighfactorsthatsuppressit.Hecitedspecialtydrugsasthefastestgrowingcomponentoftrends,andhighlightedthatwhilelessthan2%ofthepopulationisusingaspecialtydrug,thisaccountsfor50-60%oftotaldrugcosts(anddrugcostsare20%oftotalhealthcarecosts).Mr.Baginindicatedthatunderlyingthecosttrend,overthelastyearprescriptiondrugtrendshavecontinuedandmaybepickedup,whileotherhealthcarecosts(e.g.hospital/provider)aredown.Underpinningthis,henotedthatmanufacturerscontinuetoraisethepricesofdrugs,andspecialtydrugpricesarerisingfasterthananyothercomponentsofhealthcare.Further,afterthepandemic,Mr.Baginbelievestherewillbemoreconsolidationwithinhospital/healthsystems,andthatthatwillputmorepressureonpriceandunitcostsinhospitalsandprovidernetworks.Regardingthepotentialforhigheracuitylevelsinthepopulationandpent-updemand,Mr.Baginindicatedthisisaconcernamongemployersandcitedthattherearemanypeoplewhohavenotreceivedthecaretheyneeded.Thereisconcernaboutpatientswithchronicconditionsnotreceivingcare,andthereisabigfocusonprimarycareandprevention.Forthisreason,employerswantpeopletogetbackintodoctors’offices,andthereisaconcernthatpeople’shealthhasworsenedovertime,whichwillbeseenincostinadditiontothebouncebackgenerally.Whentheeconomyisopenandpeoplearemorecomfortablegoingintodoctors’offices,therewillbepent-updemand,accordingtoourconsultant.Mr.Baginisprojectingforthesecondhalfoftheyearutilizationandcosttobe2-3%abovewhatwasexpected,andnotedthatisprobablyconservative.AmazonInitiativesAddressingrecentmovesbyAmazonintothehealthcarespace,Mr.Baginnotedthatemployersareinterestedinanysolutionthatmighthelpthem,andbelievesthatlargeemployerswouldbeopentothediscussion.Heindicatedhoweverthat“nobodywantstobefirst”asageneralthemeinthebenefitsenvironment.Buydowns/Co-PayandDeductiblePressuresMr.Baginaddressedemployerwillingnesstoshiftcoststoemployees,notingthisisnotthecaseintheLargeGroupmarket.ThisismoresothecaseintheMiddleandSmallmarket,butintheLargeGroupmarkettheappetitetoshiftcoststoemployeesisdown,andthereisgenerallyalotofsensitivityinpassingmorecostsontoemployeesnow.HighDeductibleHealthPlans(HDHPs)Mr.Baginbelieves“thetideisturning”onHDHPs.EnrollmentinHDHPiscurrentlyinthemid-30s,andhebelievesthatconsumerismhasalmostrunitscourseandnotedthatsomeacknowledgethatitdoesnotworkwellinhealthcare.Additionally,theissueofaffordabilityisbecomingmorewidelydiscussed,and,forthosereasons,HDHPsareplateauing.Hecitedforexamplethatalargegroupofthepopulation(30-40%)doesnotevenuse$1,000ofhealthcareinayear,and,therefore,thesepeopleseenovalueinpayingpayrolldeductionsforaplanwitha$1,500deductible.ManagedCare824May2021NarrowNetworksMr.Baginnotedthatthereisaverylowtake-uprateamonglargeemployersfornarrownetworkplans.Theprimaryissuewithnarrownetworkswithlargehealthplansarethattheyaremorefocusedoncontractedratesthanquality,headvised.Technology-EnabledInsurersMr.Baginhighlightedtechnology-enabledcompaniesasaSmallgroupmarketinitiative.HecitedOscarexpandingintonewstatesandcompetingfortheSmallGroupmarket,buthasnotgottentotheMiddleorLargeGroupmarketyet.Hebelievestheirmodelofvirtual-first/directedplansisamodelthatwillgrowovertimeintermsoftake-uprates,butnotesthatfinanciallytheyhavestruggled.TrendGuaranteesMr.Baginindicatedthathealthplansarenotbeingaggressiveontrendguarantees,onthepharmacysideormedicalside,inthecurrentcontractingenvironment.TheonlyplacethatisseeingguaranteesistheMA-PDside,withmulti-yearguaranteesandrisk-sharingagreements.EmployeeDumpingMr.Baginnotedthatemployers“dumping”employeesontothePublicExchangesisaviableoptionintheSmallmarket,orfororganizationsthatarefinanciallychallenged.Self-FundedASOvs.Full-RiskMr.Baginbelievesthatlargeemployerswillstayself-insured,whileSmallGroupemployerswillstayfull-insured.FortheMiddleMarket,henotedthatasinsurerswerehighlyprofitablein2020,manyMiddleemployerswillseethatandbelievetheyshouldself-insure.Ontheotherhand,iftheybelievetrendsaregoingtopickup,itmaybeabadtimetoself-insure.Overall,itremainsanopenquestionforthemiddlemarket,whiletherestisstatusquo.BluesLitigation/SettlementRegardingtherecentsettlementoftheBluesantitrustlitigation,Mr.Baginbelievesthiswillincreasecompetition.ItwillfavorlargerBluesorganizationssuchasANTMandHCSCwhicharenationalinscope,multi-state,andcanhandlelargeclientbusiness.Now,theycancompetewheretheycouldnotbefore.ForalargebusinessinastatewithasmallerBluesorganization,theymaynowfeelliketheyhaveaviableBluesalternative.CompetitiveLandscapeMr.BaginhighlightedgreatofferscomingoutofleadingorganizationssuchastheBlues,UNH,CI,Aetna,andnoteditisverycompetitiveinthemarket.HeviewsthePBMlandscapeasmorestatusquo,not“steppingup”thesamewaythatisseenonthemedicalside,andbelievestheyarecontinuingthewaytheyhavehistorically.Henotedthatwhilelargeorganizationsaregoingtobewithoneofthemainplayers,thereismoreinterestinsecond-tierorganizations.ThereisadecentamountoffrustrationwithlargePBMs,andorganizationsarelookingforalternatives,buthedoesnotbelievethelargemarketisgoinginthatdirection(butismoreanalternativeoptionforMiddleMarket).Overall,hebelievesmarketshareforthebigthreeplayersonthePBMsideissodominatingthatotherplayerscannotcompetefinanciallywiththeiroffers.MedicaidMarketUpdateWehostedAriGottlieb,PrincipalatA2StrategyGroup,fortheMedicaidMarketUpdatesession.ManagedCare924May2021MedicaidEnrollmentGrowthOverviewFrom2013-2016,MedicaidenrollmentwasdrivenprimarilybyMedicaidExpansionasaresultofthepassageoftheACA–inthattimeframe,enrollmentgrewfrom57mlnto73mlnAmericans.ThistimeperiodalsoexperiencedashiftfromFFStomanagedMedicaid,withpenetrationincreasingfrom59%to72%.From2017-2019,theMedicaidmarketreachedamorematurestage,withenrollmentrelativelysteadyat73-76mlnasaresultofimprovingeconomicconditionsandthegreateruseofredeterminations,offsetbycontinuedexpansion.TherecontinuedtobeamodestshifttoprivateMedicaidinthistime,withapproximately75%ofcoveredlivesinmanagedMedicaidasmorestateswenttonearly100%managedcare.COVID-19ImpactsInhispresentation,Mr.GottliebprovidedacomparisonofthehypothesizedresponseandactualresponseinMedicaidenrollment,asaresultoftheCOVID-19pandemic,assummarizedinthefigurebelow.HenotedthatMedicaidenrollmentwashypothesizedtopotentiallygrow30-40%toover100mlnlivesatthestartofthepandemic,butactuallyincreasedbyapproximately15%.Heattributesthisdiscrepancytotherelativelyquickrecoveryintheunemploymentenvironment,andpoliciesthatlimitedthenumberofpeoplewholostemployer-sponsoredinsurancealongwiththeirjob.Additionally,henotedthatmanypeoplewholosttheirjobsmayhavealreadybeenonMedicaid.Regardingstateactions,Mr.Gottliebhadhypothesizedthatprocurementswouldbedelayedinlightofmarketconditions,whichhasprovencorrect,andnotedthatsomewereevencanceled.Onreimbursementdynamics,theimpactstostatebudgetstoMedicaidturnedouttonotbeassignificantashypothesized,thoughhenotedthatsomestateshadretroactiveratedecreasesin2020(whilethemorecommonactionwasriskcorridorsorotherrisk-sharingmechanisms).Figure1:HypothesizedResponsevs.ActualImpactofCOVID-19PandemiconMedicaidEnrollmentSource:KaiserFamilyFoundation,A2StrategyAnalysisMr.GottliebalsodiscussedananalysisthatfoundthatMedicaidenrollmenthasgrownsubstantiallyacrossvariousstates,regardlessoftheireconomicperformance,whichhighlightstheimpactofpausedredeterminations.Withinthedataset,hehighlightedthatcertainhigh-ManagedCare1024May2021unemploymentstatessuchasHawaii,NewMexico,andNevada(with8.1-9.0%unemploymentrates)experiencedMedicaidenrollmentgrowthof20%,11%,and24%,respectively,ascomparedtoJanuary2020.Meanwhile,low-unemploymentstatessuchasSouthDakota,Nebraska,andIowa(2.9-3.7%unemploymentrates)experiencedMedicaidenrollmentgrowthof15%,35%,and17%,respectively,overthesameperiod.Oftheapproximately12-15%overallgrowthinMedicaidseenoverthepastyear,ourexpertposits7-10%ofthegrowthisattributabletothelackofredeterminations.Figure2:EconomicImpactvs.MedicaidEnrolmentGrowthAcrossVariousStatesSource:StateReports,BLS,A2StrategyAnalysisProcurements/PipelineMr.Gottliebindicatedtherearemanyprocurementsthatareinprocess,recentlyhappened,orishappeningsoon.Thereweremanydeferralsin2020into2021,andtherewerealsosomeprotestsleadingtoreprocurements(e.g.Kentucky).HehighlightedthesignificantonestowatchareCaliforniaandTexas–CaliforniaisontracktoissueitsRFPlaterthisyear,anditwillbeeffectivein2024.Nationwidethereareapproximately55-60mlnlivescoveredbyprivateMedicaidplans,and12mlnaloneinCalifornia.Californiaprimarilybidscounty-by-county,andourexpertadvisedthatinLACountyonlyoneCommercialplanwillwin,andthereareover3mlnindividualsinmanagedMedicaidinLACountyalone.OutsideofCAandTX,Ohiowasrecentlyawarded.Hawaiiwascanceledandre-awardedtoincumbents,whileNevadajust