Mixed Outlook for Medicaid Managed Care

The weak economy and job market are a mixed bag for Medicaid managed-care organizations. While Medicaid enrollments are likely to increase as unemployment rises, state budgets are under significant strain from falling tax revenue, and Medicaid is a prime target for cuts. UnitedHealth UNH is the only MCO to report earnings so far, and Medicaid enrollments were up 3.8% from the last quarter. With third-quarter results for the Medicaid MCOs in our coverage universe, we hope to provide more color on the evolution of enrollments, revenue, and margins, especially for Centene CNC and Amerigroup AGP. We are keeping WellCare Health Plans WCG not rated until the company catches up with its financial statements, and we expect to publish a new report on Molina Healthcare MOH shortly.