Centene Corp. is among the most prominent players in the Affordable Care Act (ACA) market exchange. The company is believed to be drawing a massive chunk of its annual revenues from government-subsidized health insurance. Centene is consistently exploding in the past years, and in large part due to the ACA, but it seemed that the insurer is not entirely living up to the ideals of Obamacare.
According to the Kaiser Family Foundation, the ACA rules had determined a total of $216 million as rebates in 2019 for Centene. The amount was spread out where the company has a business presence. Like in Georgia, the company had an ACA rebate obligation of nearly $60 million in the same year.
Now the story behind these ACA rebates is interesting. It indicates that a company failed to meet the specific requirements set by the law for insurance companies that are earning big from subsidized health plans. The government acknowledges that insurers like Centene are making a killing in the ACA exchange, and these firms are expected to give back.
Centene Pays Rebates For Missing The Target
So in the year mentioned, the government had calculated a massive rebate obligation for Centene because the company failed to meet the appropriate threshold set by the ACA. Specifically, Centene must spend a portion of its ACA revenues in a given period, and failure to do so will lead to a form of penalty.
The law has a Medical Loss Ratio component that requires insurance providers to spend part of their ACA revenues to fund health care claims or sponsor quality improvement activities. Companies must allocate at least 80% of revenues from premiums for such undertaking.
Yet in the case of Centene, the government labeled the company as part of the biggies, so the minimum set for the insurer is 85%. In 2019, Centene fell short of the mark set by the ACA, and consequently, colossal rebate obligations hit the company a.
For perspective on how Centene bungled in the act of giving back, the company’s ACA rebate obligations in Georgia were nearly the total of the 2019 rebates. The ACA had totaled the rebates for the year at $65 million, and $60 million of which Centene must payout.
The juice of the narrative is this: While most insurance industry players failed to abide by the ACA rule, the data indicated that Centene is the guiltiest of all the culprits. The insurer paid out over $200 million in a year alone, which indicated that following rules is not a priority for Centene.
And the most disturbing part was the suggestion that doing good seemed bothersome for the Fortune 500 company. As the Kaiser Family Foundation report had indicated, Centene had elected to be penalized instead of avoiding the rebates by just following the law.
Centene Behavior Is Not Surprising
In hindsight, how Centene operates its business with the ACA setting was not out of character. Centene CEO Michael Neidorff has been consistent in saying that he is laser-focused on growing the company. Thus, his agenda is to increase profits, and doing charity works is not about to distract him.
Centene is tipped to become a $120-billion company real soon, and Neidorff had already made public his plan to pull $1 billion for the company in the next three years. It should be noted that in advertising his grand vision for Centene, Neidorff always leaves out the sweet parts like saying sorry to the victims of Centene’s ruthless business practice.
In the same way, it seemed clear that Centene’s business model excludes any room for good deeds, or at least acts of kindness.
