Centene anticipates tax credit extensions under Trump administration

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By Amina Niasse and Mariam Sunny

(Reuters) -Centene expects president-elect Donald Trump’s administration to extend “some portion” of tax credit refunds that help millions of Americans cover the cost of Obamacare plans as the company gears up for more scrutiny into two of its largest businesses.

The health insurer provides both government-backed Medicaid plans for low-income people, as well as income-based government-subsidized health insurance under the Affordable Care Act, also known as Obamacare – businesses that Wall Street analysts expect could be targeted by the new administration.

The tax credits, which were originally set to expire in 2023, were extended through 2025 as part of a new provision within Joe Biden’s Inflation Reduction Act.

Republican governors and state legislators are “overwhelmingly supportive” of the enhanced premium tax credits and individual market which now covers more than 20 million Americans, Jon Dinesman, Centene’s executive vice president of external affairs, said on Thursday.

The company still expects political skepticism from the new administration to target its Medicaid business, Dinesman added.

The comments came at Centene’s investor conference on Thursday. The event, originally slated to be in-person, took place virtually after the fatal shooting of Brian Thompson, the CEO of UnitedHealth Group’s health insurance unit.

“2024 has been a long, complicated and now tragic year for the industry,” Centene CEO Sarah London said at the investor day, which began with a moment of silence for the UnitedHealth executive.

Thompson’s killing has sparked social media outrage among Americans struggling to receive and pay for medical care in the complex health insurance system, drawing renewed attention to deepening frustrations over healthcare coverage in the country.

Meanwhile, the industry has been grappling to contain costs due to higher demand from members enrolled in government-backed Medicare plans for older adults or those with disabilities, as well as prolonged Medicaid re-determination that has left the companies with more sick patients in need of medical care.

Centene forecast 2025 profit above Wall Street expectations, banking on higher enrollments in its commercial business.

The insurer said it expects its Medicare business to break even by 2027. Medicaid plans account for a substantial amount of Centene’s total revenue and medical membership.

“Republicans coming into control of the federal government … threatens its Medicaid and individual exchange strongholds,” Morningstar analyst Julie Utterback said.

Centene expects an adjusted profit greater than $7.25 per share next year, compared with the average analyst estimate of $6.97, according to data compiled by LSEG.

(Reporting by Mariam Sunny and Christy Santhosh in Bengaluru and Amina Niasse in New York; Writing by Manas Mishra; Editing by Sriraj Kalluvila and Shounak Dasgupta)