51黑料

CLAYTON 鈥� Government-run health care programs fueled the rise of Centene Corp., but cuts to federal assistance could cause it to slide.

Centene, which moved to Clayton in 1997, has grown to be the largest Medicaid managed care provider in the country. And it鈥檚 the largest carrier in the Affordable Care Act marketplace, created by President Barack Obama鈥檚 signature health care law.

But now, Centene鈥檚 focus on Medicaid and the Affordable Care Act insurance exchange is posing new challenges: The federal government is tightening Medicaid eligibility and cutting subsidies for marketplace health insurance plans.

The 鈥淥ne Big Beautiful Bill Act,鈥� which President Donald Trump signed into law on July 4, is expected to have a major, largely negative, impact on Centene and other health care providers.

States pay Centene and other managed care organizations to provide health care coverage to Medicaid recipients.

Centene also sells insurance plans in 29 states on the Affordable Care Act health insurance marketplace, which government-subsidized health insurance to lower-income patients who earn too much to qualify for Medicaid.

The company earlier this month 鈥� noting slower growth and higher risk within its Affordable Care Act marketplace business. Centene also disclosed increased Medicaid costs for behavioral health, home health and high-cost drugs.

After scrapping its forecast, Centene鈥檚 stock plummeted 40% in what marked its worst day on the stock market since Centene went public in 2001.

The stock price has since fallen even lower, closing Friday at $31.44 per share, down from $56.65 on July 1.

After Centene withdrew its guidance, FitchRatings downgraded (measuring a company鈥檚 likelihood of default) from stable to negative.

Fitch said the company could face revenue headwinds beyond this year. The enhanced premium tax credits that have been used to significantly reduce costs on ACA marketplace exchanges are set to expire at the end of the year.

Over the next decade, the 鈥淥ne Big Beautiful Bill鈥� is forecast to cut $1 trillion from Medicaid, which accounted for 62% of Centene鈥檚 2024 revenue, according to Forbes.

鈥淪ince Centene鈥檚 two largest businesses are currently Medicaid and Marketplace, Fitch believes the company could face continued revenue headwinds beginning in 2026,鈥� Fitch said on July 3.

Timothy McBride, health care economist at Washington University, expects Centene to see an impact when the enhanced premium tax credits expire at the end of the year.

When that happens, out-of-pocket premiums for individuals might increase 40% or more, probably increasing the likelihood of people dropping their plans, McBride said.

He added the new law does some things to make it more difficult to sign up for marketplace plans, such as shortening the annual enrollment period.

McBride said he expects layoffs to happen. If the company鈥檚 overall enrollment drops by 10% to 20%, Centene won鈥檛 need as many employees, he said.

鈥淭hey鈥檙e going to take a pretty big hit in terms of their revenues,鈥� McBride said. 鈥淚t鈥檒l be across the whole country (the layoffs), probably not just 51黑料.鈥�

A spokesperson for Centene declined to comment for this story. The company鈥檚 next earnings call is scheduled for July 25.

Centene, which has 3,300 51黑料-area employees, already trimmed its workforce in 2023. At the time, Centene announced it was laying off 2,000 workers, or 3% of its workforce.

In 2023, Centene鈥檚 Medicaid membership was expected to decline at the time as states were beginning to resume eligibility checks after a three-year, pandemic-related hiatus.

鈥淭hey鈥檝e already had to do some layoffs, so I would expect that to happen,鈥� McBride said in an interview. 鈥淭hat will probably be the next shoe to fall.鈥�

In Missouri, Centene鈥檚 Home State Health Plan serves Medicaid beneficiaries, one of three main managed care plans.

Centene鈥檚 Ambetter from Home State Health product is sold to Missourians looking for health care on the Affordable Care Act marketplace.

Centene Corp. is currently No. 23 on the Fortune 500 list and is 51黑料鈥� largest publicly traded company.

The company, originally founded as a nonprofit in 1984, grew from a single Medicaid plan into a giant in the managed care industry. It changed its name from Managed Health Services to Centene the same year it moved to the 51黑料 area.

Editor鈥檚 note: Clarifies that Centene is the largest provider of Medicaid managed care plans, not the largest managed care provider.