Anthem reported an 8% profit boost in the second quarter of 2019, citing growth in the insurer’s membership in government plans and fully insured plans for the increase. Anthem’s total enrollment was about 40.9 million members. Fully insured membership grew by 1.1 million, or nearly 8%, in the quarter, and government plan enrollment increased by 1 million. Anthem reported profits of $1.14 billion on revenues of $25.5 billion in its second quarter.
Anthem’s operating revenue was $25.2 billion in the second quarter of 2019, an increase of $2.5 billion, or 10.8 percent, versus $22.7 billion in the prior year quarter. Anthem’s benefit expense ratio was 86.7 percent in the second quarter of 2019, an increase of 330 basis points from 83.4 percent in the prior year quarter.
The increase in benefit-expense ratio is a result of the premium reimbursements that Anthem is receiving have not fully compensated the company for the risk that it is taking on its overall portfolio.
Anthem also announced its entrance into an agreement to acquire Beacon Health Options, Inc., the largest independently held behavioral health organization in the country. Beacon serves approximately forty million individuals across all fifty states.
This acquisition aligns with its strategy to diversify into health services and deliver both integrated solutions and care delivery models that personalize care for people with complex and chronic conditions.
Anthem expects enrollment in government plans will continue to grow, notably among Medicare and dual-eligible beneficiaries, and it is strengthening its capabilities in those areas. Anthem is also optimistic that the early performance of its new PBM, IngenioRx, will help the company reach the higher end of its guidance forecast for the year.
Anthem received transition approvals to IngenioRx from all 14 of its Blues plan states and from most states it serves in Medicaid. IngenioRx also signed its first pharmacy contract and will service Blue Cross of Idaho beginning in January, 2020.
Anthem has recently opened a state-of-the-art, 24 by 7 pharmacy care center in Las Vegas, providing both member support and eventually dedicated specialty patient care to accelerate IngenioRx’s launch. Anthem expects to have all of its members on the IngenioRx platform by January 1, 2020, dedicating 2,500 individuals to this transition.
Anthem’s focus remains primarily on existing client transitions for 2020, although it remains confident that it will capitalize on opportunities across the marketplace to bring innovative pharmacy services back to its medical clients.
Anthem is also working to keep drug trends relatively flat and focus on total cost of care. The objective is to focus on whole-person health, which is managing the alignment of incentives at the care provider level with the incentives around pharmacy in order to manage total costs.
Anthem’s early transition of members to IngenioRx has gone well with the company converting several million members in the second quarter of 2019 and several million more in July.