Jul. 12 at 6:40 PM
$CNC Most people misunderstood the mechanics behind the guidance withdrawal. It's not Centene that had higher costs and lower enrollment growth, it's their competitors (overall market). Relatively, Centene's doing so well, it has to pay competitors
$1.8 billion to preserve competition.
The ACA's Risk Adjustment Program tries to balance out that actuarial risk with a zero-sum compensation system. Centene's competitors took on more risk and had less enrollment growth. That's why Centene has to pay its competitors
$1.8 billion to help them avoid death spirals.
This is not good for Centene in the short term because it is a drag on earnings, but the business and management are doing great on metrics that matter long term.