Centene Corp. (NYSE:CNC) will offer buyouts to most employees as the health insurer seeks to reduce costs following a significant decline in membership across its health plans.
The U.S. insurer launched a voluntary separation program that will allow eligible employees to apply for buyouts. However, participation is not automatic, and applications will be subject to company approval, the company spokesperson told Bloomberg.
Workforce Reduction Plan Takes Shape
Centene employed approximately 61,000 people during the first quarter. While the company did not disclose how many positions it hopes to eliminate through the program, it indicated that additional workforce reductions could occur if voluntary departures do not meet internal targets.
ACA Business Sees Largest Membership Decline
Bloomberg’s report on Tuesday added that Centene experienced the most significant enrollment losses in its Affordable Care Act (ACA) marketplace business.
According to the company, membership in those plans fell by roughly 2 million this year. The decline followed the expiration of pandemic-era federal subsidies that had helped reduce costs for ACA plan enrollees.
Congress allowed those COVID-era subsidies to expire, resulting in higher costs for many consumers purchasing coverage through ACA marketplaces.
During the first quarter, total membership across Centene’s portfolio declined to 26.27 million from 27.9 million a year ago. Marketplace membership fell from 5.626 million to 3.582 million in the first quarter.
Centene CEO Discusses ACA Membership Trends
At the Barclays Global Healthcare Conference in March, Centene flagged lower membership in some ACA plans. Centene noted that ACA membership attrition would shrink somewhere between the high teens and the mid-30s.
“But we were pretty consistent in the view that we would be at the higher end of that and possibly higher than the top end of that, partly because of our FPL mix and partly because of the pricing actions that we took coming into the year and our focus on margin over membership,” Sarah London, Centene’s CEO, said.
CNC Price Action: Centene shares were down 2.08% at $62.63 at the time of publication on Tuesday, according to Benzinga Pro data.
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