Elevance Reports Stable Medicare Advantage Costs Amid Market Volatility

Elevance Health reported first-quarter results showing Medicare Advantage (MA) utilization and spending aligned with company expectations, contrasting with UnitedHealth's report of MA utilization growth at twice its predicted rate. Elevance's Medicare Advantage segment represents a smaller proportion of its overall medical membership, about 5%, with 2.3 million seniors enrolled. The company experienced higher costs in Q1 but managed to offset these through premium increases, maintaining a cautious approach for the remainder of 2025 due to ongoing market volatility. Executives emphasized close monitoring of claims, prior authorization, and provider data to detect emerging trends early.

Elevance's stability in health benefits is partially attributed to favorable Medicaid rate updates, following challenges from states re-evaluating Medicaid eligibility post-pandemic, which led to significant member disenrollment and more expensive risk pools for insurers. The company is actively engaging with states to secure payment rate increases in its Medicaid managed care contracts, which cover more than two dozen states. Rate renewals earlier in the year have shown progress, with further discussions underway for July renewals affecting a sizable portion of Elevance's Medicaid business.

In addition to Medicaid, Elevance expanded its Affordable Care Act (ACA) presence by entering three new states—Florida, Maryland, and Texas—to capture members transitioning from Medicaid. The insurer ended the quarter with over 5.1 million ACA enrollees, although member effectuation rates have been somewhat lighter than expected due to passive renewals and the conclusion of grace periods for coverage continuation. Consequently, a mid-single-digit percentage decline in ACA membership is projected for the second quarter.

Overall, Elevance Health's membership grew modestly to 45.8 million, with health benefits division revenue reaching $41.4 billion, an 11% increase year over year, while operating profit declined slightly by 4%. Meanwhile, the health services division, Carelon, saw significant growth with revenue increasing 38% to $16.7 billion, boosted by the recent acquisition of home health provider CareBridge. Carelon's operating income rose 34% to $1.1 billion. The financial results reflect Elevance's strategic positioning amidst evolving payer/provider dynamics, regulatory pressures, and market trends in Medicare, Medicaid, and ACA sectors.