Elevance Health's employer plans thrive amid rising claims thanks to rate hikes

But Elevance is "very pleased with the trajectory" at its large-group plans, according to Mark Bradley Kaye, the company's chief financial officer.

Although large-group plans are facing the same kinds of forces, such as higher emergency room bills and high specialty drug costs, that other types of plans are seeing, Elevance is having an easier time charge enough for large-group coverage to offset the increases, executives said.

"In 2025, our guidance continues to include expected strong, consistent margin performance," Kaye added. "Group medical trend continues to remain elevated, but, really importantly, in line with what we've expected and what we've priced for."

Morgan Kendrick, president of the commercial health benefits business, also talked about the company's ability to charge higher prices.

"We're seeing the market harden quite a bit relative to pricing," Kendrick said. "The market rationalized around the proper trends and the proper pricing on the business."

Many fully insured employers facing big premium increases for coverage end up using Elevance to help them set up self-insured health plans, and that means they continue to be Elevance customers, Kendrick said.

Gail Boudreaux, the Elevance chief executive officer, praised the recent performance of the company's benefits business. "Morgan and the team have done a nice job there," Boudreaux said.

Elevance streamed the call live online and has posted a recording on its website.

The health benefits backdrop: The impact of new Affordable Care programs and commercial cost control strategies helped hold down employer health plan cost increases in the late 2010s, and the COVID-19 impact then held down costs for a few years, by discouraging people from going to health care facilities for preventive care, routine sick care and even some types of elective surgery.

About two years ago, commercial health plan claim costs started to move sharply higher.

Issuers of stop-loss insurance, or insurance for employers' self-insured benefit plans, have been talking about seeing a big surge in medical claims for about a year.

In May, UnitedHealth said it was withdrawing its earnings predictions for the year because of concerns about claims at employer-sponsored Medicare Advantage plans, or health coverage programs for retirees.

Centene and Molina, two carriers that focus on selling coverage to individuals, said earlier this month that they now expect to do worse than they originally expected because of higher-than-expected claim costs.

Centene withdrew its earnings guidance because of concerns about claims at individual policies sold through the ACA exchange system.

Related: Molina's warning raises questions about costs at Aetna, Cigna, Elevance and UnitedHealth

Molina said it was cutting its full-year earnings guidance to about $21.50 to $22.50 per share, from $24.50 per share, because of concerns about claims at all of its three major lines of business: Medicare policies, Medicaid plans and ACA exchange policies.

Elevance earnings: Elevance reported $1.7 billion in net income for the second quarter on $50 billion in revenue, compared with $2.3 billion in net income on $44 billion for the second quarter of 2024.

The company ended the quarter providing or administering coverage for 45.6 million people, down from 45.8 million people a year earlier.

Here's what happened to key types of employer plan enrollment described in the earnings:

◆ Employer group fully insured: 3.6 million (down 0.9%)

◆ Employer group fee-based: 6.6 million (down 1.8%)

◆ Federal employee program: 1.6 million (down 1.1%)

Individual enrollment increased 5.2%, to 1.3 million, and Medicare Advantage plan enrollment increased 11%, to 2.3 million.