Good morning, everyone. I'm Jennifer Gilligan, Senior Vice President of Finance and Investor Relations. Welcome to Centene's virtual 2021 Financial Guidance and Investor Day. We are pleased to have an opportunity to update the investor community and thank you for spending some time with us this morning. Earlier today, we issued a press release providing our full year 2021 guidance.
This press release as well as today's slide presentation can be found on the Investor Relations page of centene.com. Additionally, please mark your calendars for our Q4 2020 earnings call scheduled for Tuesday, February 9. Now for the obligatory forward looking statements. Please note that various remarks we make today regarding future expectations, plans and prospects constitute forward looking statements under U. S.
Securities laws. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the slides you see in front of you and the Risk Factors section of our most recently filed quarterly report and other SEC filings. Centene disclaims any obligation to update this forward looking financial information in the future. Additionally, during this presentation, we will be discussing certain non GAAP, that is generally accepted accounting principles, financial measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in today's slide presentation, which is available on our website atcentene.com.
I will now walk through some housekeeping items related to our virtual format, including instructions for Q and A. With the interest of our team's safety in mind, we will not convene as a large group today. As previously announced, some of today's content is prerecorded. Our question and answer sessions will be conducted live and our management team will participate virtually. Questions can be submitted through the chat function on your screen.
Your questions will only be visible to the Centene Investor Relations team. We will read aloud the questions and the name and organization of the person submitting the questions. Questions can also be submitted via e mail. Feel free to send your questions to libby abelt@laebeltcentene.com. After the virtual event concludes, we encourage investors and analysts to contact the Investor Relations team with any additional inquiries you may have.
Finally, I'd like to highlight a few key themes that our management team will touch on during today's program. First, operational agility and how our organizational strength enabled Centene to successfully navigate 2020. 2nd, size and scale and the way our diversified healthcare enterprise is well positioned to pursue a multitude of growth opportunities and third, the acceleration of our technology strategy. With that, I would like to introduce Chairman, President and Chief Executive Officer, Michael Neidorff. Michael?
Good morning, and thank you for joining us today. I hope this finds you, your family and all your loved ones safe and healthy. Before we begin, we would like to share a video with you highlighting some of our key achievements for 2020.
For more than 35 years, Centene has helped families and individuals access high quality healthcare. With the acquisition of WellCare in 2020, we now serve 1 in 15 Americans across all 50 states. Our diverse workforce is 75% women and 50% identify as people of color. While 64% of our employees in supervisory positions are women and 36% identify as people of color. This year has presented many challenges.
COVID-nineteen altered delivery of care.
We have limited access. A lot of the doctors' offices are closed or, you know, nurses are taking messages and calling you back because the physicians that are doing visits are doing televisits.
And it caused us to enable 90% of our employees to work remotely.
We were able to spin up thousands of servers within a couple of days so we can have the increased pass lead for those users that are coming in remotely now that have never been there before.
My sons, my grandsons, they're black males. And I worry that they can be minding their own business and suddenly find themselves in a really bad
place. Despite the many challenges, Centene's local approach and unwavering commitment to helping at risk populations has never been stronger.
We were protected here when necessary. We ask the right questions when it's time to go out and we always keep in mind that our members are our purpose. They are the reason that we're here.
And we've continued to grow, adding nearly 10,000,000 members and more than 17,000 employees in the last year, while revenue grew more than 50%. In this time of crisis, we have also helped our employees return to their clinical roots by offering 3 months paid leave for clinical staff who choose to join a medical reserve force for treating COVID-nineteen patients.
I have a blister on my nose, which every time I go to work, it hurts for the entire 12 hours. The mask is very tight. But as the shift wears on and someone's not doing well and you and your teammates are trying to save this person, you don't even realize that you have this on anymore.
And our mission is being carried out in international markets.
We moved professionals from other regions to Madrid, to Torajon Hospital for two reasons: to help them and the second reason, to learn from the experience to treat patients with COVID-nineteen.
Our impact is felt in communities that need it most. This year, we've supported disaster relief efforts for victims of wildfires, floods and devastating storms. And partnering with Feeding America, we've been donating 1,000,000 meals per month to feed individuals and families all over the country. Plus Centene and its health plans committed more than $18,000,000 to expand telehealth services and distributed 13,000 prepaid cell phones to patients through 175 healthcare providers to improve telehealth accessibility.
As a health plan, it was hard imperative to ensure that all of our members could access telehealth. Within a few short weeks, more than 2,000,000 members had access to telehealth who did not have it previously.
It's an honor to have our growing impact recognized by leading business publications and organizations. At Centene, no challenge will ever cause us to lose sight of our members and their health. We're a trusted partner transforming the health of communities one person at a time.
I often say that experience is the sum of experiences, but there is no experience that could have prepared us for 2020, and the magnitude of the impact that COVID-nineteen has had on our world.
It has
been a remarkable year and one that has reinforced the importance of organizations like Centene that make a meaningful difference in people's lives. I am proud of what our team has accomplished, and that during these challenging times, Centene has delivered on our mission to provide high quality health care to the most vulnerable populations. At Centene, we believe that purpose driven organizations have the greatest longevity because they deliver tangible value to the people they serve. And 2020 clearly represents a year where we delivered value to all stakeholders through a relentless focus on our mission. Our dedication and management in a crisis allowed us to support members, providers and state partners, while creating significant value for our shareholders.
This year, we have seen strong organic membership growth with approximately 25 point 5,000,000 members by the end of 2020. In addition, the integration of WellCare has gone smoothly and we remain on schedule with systems and health plan integration activities. We are pleased with the progress achieved to date, including delivering on synergies and transforming the growth profile of our Medicare business. Overall, for 2020, we expect to deliver revenue and adjusted diluted EPS growth of 48% and 13%, respectively. But we have grown due to the pandemic.
I want to be clear that we did not need the pandemic to grow. And we, of course, would have much preferred to do without it. When adjusted for the impact of the pandemic related growth, our 2020 revenue and adjusted diluted EPS growth would have been 43% 8%, respectively, a tremendous accomplishment. Over the past 25 years, we have transformed Centene from a health insurer in 3 counties across 2 states to $110,000,000,000 diversified international healthcare enterprise with leadership positions across products and geographic markets. The diversification and scale of our business today are critical elements of our future long term success, providing us with attractive opportunities for growth across markets and products, the ability to withstand and absorb volatility and near term pressures in any specific business area, the financial strength to invest in our business, in new products and in communities in which we operate and opportunities to leverage our size and scale to control expenses and deliver margin expansion.
But we're not done. Building on these strengths, we are transforming our organization and preparing Centene to continue to lead in an evolving healthcare industry and environment. As you know, our ambition is to transform Sensene into a technology company that does healthcare. Achieving this will underpin and accelerate all of our other aspirations. We will provide a delightful experience for our members and providers, develop innovative solutions to deliver better health outcomes and become an even more efficient organization, on top of our already highly disciplined approach.
With that as the strategic backdrop, I think it is important that today you hear from Centene's senior leadership team about how we intend to deliver on those aspirations. Today, our technology team, including Sarah London, Brian Sivak and Mark Brooks, as well as Darren Schulte, who recently joined us from Epixio. We'll talk in more detail about how we are accelerating our technology transformation. They will also show you how we are enhancing our organizational structure to ensure innovative and technology related companies are able to maintain their independence. John Dinesman and our government relations panel will discuss the promising political environment for Centene and Brent Layton and our operations team will share updates on continued progress and growth opportunities across our products.
Looking ahead to 2021, we continue to be conscious of our operating environment and factors that remain difficult to predict. These include the timing of vaccine distribution and fluctuations in utilization and membership until people again seek healthcare as they did prior to the pandemic. Our goal has always been transparency and I want to acknowledge where results have not met our expectations. While we are pleased with our performance in Medicare, we are expecting above market growth. We anticipate a more challenging performance in marketplace next year, which has impacted our 2021 EPS guidance.
Jeff will share additional details. But in a limited number of counties, we decided not to join our competitors in competing on price. As an experienced participant in marketplace, the trend we are seeing is competitors ending the market on price alone with limited networks and was drawn a year later. We will not participate in a price related race to the bottom and we are maintaining our strategy, which is successful. While we expect to see lower membership in 2021, we remain confident in our overall offerings.
Again, Jeff and other members of the management team will outline the specifics related to 2021, which I will say is that the core tenant of our strategy remains intact, and we expect to deliver meaningful revenue and growth in 2021 and beyond. In closing, 2020 has been a year we will be glad to have behind us, but the challenges we faced allowed us to demonstrate our competencies and capabilities. We delivered for our shareholders, while leaning into the factors that differentiate us. Our commitment to underserved populations, our extraordinary team, our focus on the whole person, and our deep relationships with providers, state, and community partners.
We have
built an organization that supports members and serves them where they are, whether it's through Medicaid, Medicare, Marketplace, or any other of our products, and we will continue to find innovative solutions to improve the health of our communities. These are enduring values that will continue to guide our organization in the years ahead. With that, let me turn it over to Jeff and the team who will provide you financial details and take you through the rest of the agenda. I will see you for a brief Q and A and at the end of the program. Thank you.
Thank you, Michael, and good morning. Thank you for joining us at our 2nd virtual Investor Day. I hope everyone and their families are staying safe and healthy, and hopefully this is the last virtual Investor Day we have to host. I have a lot to cover, so let me jump right in. Before I discuss the customary guidance details, let me set the stage for 2021.
Over the last 3 years, we have solidified our leadership position in government sponsored healthcare through geographic and product expansion and strategic acquisitions. This has led to a 3 year compounded annual growth rate of 32% for total revenue and 25% for adjusted diluted earnings per share. We continued this evolution of the business with the completion of the WellCare acquisition in January of this year, adding additional scale in Medicare, pharmacy and key Medicaid markets. Then the pandemic began. We immediately refocused our efforts to support our employees, members, providers and government partners as we progressed through the crisis.
We moved 90% of our more than 70,000 employees to a work from home environment, all while not losing sight of our business objectives, including executing on our integration and synergy plan for the WellCare acquisition. And in this pandemic, we have not set still. We have strategically deployed capital to evolve and profitably grow the business in areas such as technology with the acquisition of Epixio and specialty pharmacy with the acquisition of Panther RX. We are confident in our ability to continue to make investments in new products, operational systems and technologies that we expect will continue to deliver better health outcomes at lower costs for our customers and members and will enable us to drive future growth and margin expansion. Through this disciplined capital allocation, we expect to generate long term growth rates in the mid to upper single digits on revenue and achieve double digit growth in adjusted earnings per share.
So where are we today? First, let me provide an update on 2020 and where we are through November's results. At the end of November, we had 25 point 4,000,000 members representing growth of approximately 1,600,000 members since the crisis began. This is slightly higher than our previous expectations, which will drive incremental revenue growth this year. On the revenue front, we expect incremental retroactive adjustments in the 4th quarter of almost $290,000,000 bringing the new total for the year to approximately $790,000,000 This has been driven by the proposal of a risk corridor in our California market that is retroactive to July 1, 2019 and growth in the rebate estimates in other markets due to lower medical costs.
As it relates to medical expense, through the 1st 2 months of Q4, we had experienced total medical costs that are below the historical average. This has been driven by lower non inpatient services, including elective procedures and decreased prevalence of flu compared to historical periods. Our flu costs are down 95% from this time last year. The lower flu and non inpatient expenses have been partially offset by higher COVID treatment costs and the retroactive rate and risk adjustments from our state partners I previously mentioned. Based on the results through November, we continue to expect to achieve our 2020 adjusted earnings guidance that we provided on our Q3 earnings call.
Now on to 2021. Before I get into the details of 2021 guidance, let me remind everyone that consistent with our policy of not including acquisitions in the guidance until they close, we have not included Panther RX in our guidance. As such, we have excluded the operations, the cost to close the transaction, one time integration costs and the net effect of any additional debt to fund the acquisition. For 2021, we expect total revenues to be between $114,000,000,000 $116,000,000,000 and adjusted diluted earnings per share to be between $5.30 This represents total revenue growth of 4.1 percent year over year at the midpoints. Just a quick reminder that this is an addition to our more than 48% growth in total revenues this year.
Importantly, our guidance reflects 10.5% growth year over year adjusted diluted earnings per share when compared to the adjusted baseline of 4.6 $6 we provided at the end of Q3. We expect our adjusted net income margin to increase to 2.79% at the midpoints for 2021. Digging into the details, year over year revenue growth is driven by several items including a full year of the WellCare acquisition, an increase in member months due to the continued organic membership growth primarily in Medicaid as a result of the pandemic, strong organic membership growth in our Medicare business, but we expect to increase our membership year over year in the mid teens percentage and the implementation of the North Carolina contract. This growth is partially offset by overall membership and our marketplace product decreasing year over year. The elimination of the health insurer fee, the expected carve out of pharmacy benefit management services in California and New York and lower membership expectations in our PDP business.
On the marketplace business, we expect our peak enrollment to decrease between 300 and 400,000 members and revenues to decrease by approximately $2,000,000,000 year over year driven by membership reductions primarily in Florida. Overall, in our broad geographic footprint, we saw meaningful growth. However, several competitors in 3 highly populated counties in South Florida offered low price plans that have attracted members to their products. We have experienced price disruption in prior years with competition lowering price, attracting members and experiencing financial losses only to take large rate increases the following year or exit the market. We remain confident in our long term strategy and price discipline to continue to grow and expand our marketplace product.
This pricing discipline continues to deliver expected pre tax margins in the 5% to 10% range for 2021. Additionally, based on our remaining membership mix, we expect there to be a benefit to the risk adjustment payment that has partially mitigated the earnings effect resulting from the lower revenue. We estimate the net effect of the membership decrease has lowered our adjusted earnings per share by $0.20 to $0.25 for 2021. On our Medicaid product, we have assumed that redeterminations begin on May 1. Based on that assumption, we expect our membership growth with respect to the pandemic to peak at the end of April 2021 with over 1,900,000 new members, primarily in Medicaid and decreasing thereafter.
With respect to rate increases, we expect our full year composite rate adjustment to be approximately 1.7%. This is exclusive of the risk corridors and other revenue sharing mechanisms instituted by several of our states in 2020. Our guidance includes approximately $400,000,000 of revenue reductions associated with risk sharing mechanisms instituted in 2020 that carry forward into 2021. For example, in Michigan, the state implemented a risk corridor program that ends September 30, 2021. This result of this program produces an HBR of approximately 90%.
This compares to our historical operating ratio in the high 80% range. The end result is that our HBR under the risk corridor program is higher than periods prior to the pandemic. Additionally, as a result of the pandemic, not all of our members were able to visit their doctor this year, which will lower our risk scores heading into 2021. This effect will be much more prevalent in Medicare where the risk adjustment is not relative to our competition like it is in marketplace. Moving to HBR, for 2021, we expect our consolidated HBR to be between 86.6% 87.2%.
The HBR for 2021 is primarily driven by the elimination of the health insurer fee and the effect of the ACA risk corridor recorded in 2020. We expect an adjusted selling, general and administrative expense ratio to be in the range of 8.6 percent to 9.1 percent in 2021 consistent with the 2020 expectations. The effective leverage in the 2020 impact of the risk corridor and charitable foundation contribution is being offset by the elimination of the health insurer fee and the expected carve outs on pharmacy, which carry a lower G and A ratio. The tax rate in 2021 is projected to be between 24 point 7% and 26.7%. This is substantially lower than 2020, primarily due to the elimination of the health insurer fee.
I would like to highlight other metrics, which are not part of our formal guidance. For other income and expense, investment and other income is expected to be between $310,000,000 $330,000,000 and interest expense is expected to be between $700,000,000 $720,000,000 in 2021. We expect our investment income to continue to moderate as our long term investments mature and are invested at lower rates. This has been predominantly offset by refinancing activities in 2020 that lower our overall cost of debt. Cash flow from operations are expected to be approximately 1.5 times net earnings and adjusted EBITDA to be between $5,300,000,000 $5,500,000,000 We have a strong balance sheet and expect to deploy capital in 2021 primarily to fund growth, including statutory capital into our subsidiaries, continue to reduce our leverage, invest in our technology systems and infrastructure and discipline M and A.
We will be opportunistic with respect to share repurchases at certain stock price levels, but at this time have not included any repurchases in our guidance. Our capital expenditures are expected to be approximately $820,000,000 for 2021. We expect the seasonality of our adjusted net earnings by quarter to be weighted 65% to the first half of the year. This is driven by the expectation of lower utilization in the first half of the year driven by COVID, the traditional seasonality of the marketplace business as well as higher member months in Medicaid early in the year driven by the assumption of eligibility redeterminations beginning May 1. Overall, we have delivered strong performance in 20 navigating what was an extraordinary year, achieved our synergy and financial accretion targets on the WellCare acquisition and continued to deploy capital to grow the top and bottom line and transform the business for the future.
Heading into 2021, we are well positioned to continue to execute and deliver value for our shareholders, both in the near and long term. Thank you for your time and interest. And now I will turn it over to Kevin Cunahan.
Thank you, Jeff. This morning, I will share more about the performance of our marketplace product and how we are positioned for future success. As you know, Centene is an experienced leader in the healthcare marketplace. As the product has grown and evolved, we have provided our members, providers and state partners with consistent quality services that allow individuals access to high quality care. In this year's open enrollment, we saw meaningful growth across our broad geographic footprint.
However, as Jeff said, our overall membership for 2021 is below our expectations. This decrease is driven primarily by 3 counties in South Florida, where we saw aggressive pricing from new and existing carriers. As an experienced leader in marketplace, we have seen this behavior before and we have seen carriers with aggressive pricing either quickly exit the market or raise rates. In reflecting on this challenging year, we also believe the pandemic related recession may have impacted our marketplace enrollment in a variety of ways. 1st, segments of consumers are more price sensitive, making lower priced and bronze tiered plans more attractive.
Secondly, pandemic related enrollment may be migrating to Medicaid, where CMS has projected a material increase in enrollment. With the benefit of hindsight, this result is predictable. And looking ahead, there are things we will do differently. But there are also things we will not do. We will not have a price only strategy.
We will not limit our provider networks so dramatically that we risk encouraging out of network utilization and we will not sacrifice quality for our members, providers or state partners. Instead, we will continue to offer networks and services that allow our members convenient access to quality care and we will continue to be the source of consistency and stability for all of our stakeholders. This is how we have always run our business. Our strategy has always been to take a disciplined and consistent approach. And by doing so, we have grown to be an experienced leader in marketplace.
Looking ahead, we will maintain product leadership and we will continue to grow. From a financial perspective, we are honoring our commitment to maintain margins. And as Jeff explained, we expect the membership decrease to be partially offset by a benefit to the risk adjustment payment. Our policy has always been transparency and to give you the facts as we see them today. In this unique year, we are certainly disappointed with the outcome of open enrollment, but we are confident in our long term strategy and our overall positioning.
We will continue to maintain product leadership and to provide our members with access to consistent and quality healthcare. With that, I'll turn it back to Michael and Jeff for questions.
Yes. Thanks, Ralph. First, I want to emphasize that we're the national leader in this product and are confident in our strategy to continue to grow the product profitably and continue and to be the national leader. We obviously, as you heard in our prepared remarks, we maintained our pricing discipline for 2021, while competitors in several counties in South Florida primarily lowered their prices. We did see more members, as Kevin mentioned, selecting the bronze product, which we think is the price sensitivity really driven by the pandemic.
While we were disappointed with the overall competition, some of these competition, some of these same competitors came in, they lowered their prices with narrow networks, ultimately incurred financial losses, but they took 40,000 of our members, they exited the market in the subsequent year and we got those 40,000 members back. So it appears right now to us that some of the competition is really going after a member acquisition strategy and not really concerned about the profitability of the book. Another important point is related to risk adjustment. So based on what we know today about the members that have disenrolled from our products, we expect our risk adjustment payment. And remember, we're a net payer into the risk adjustment program.
We expect our risk adjustment payment to decrease substantially almost $800,000,000 year over year. So somebody else is going to have to pick up that risk adjustment payment. And remember that the risk adjustment payment is based on the statewide average premium, not the premium that you bid. So if you are the low price leader and you get a healthy selection of members, you're already at a disadvantage. So certainly, the pandemic has changed member behavior in the short term.
But in the long term, we're confident in our product offering. We believe it provides more choices for members to receive their care. And we think that we're going to be able to profitably grow the business on a going forward basis. So in short, I would call it a one time event. Competitors can be disruptive.
We believe the overall growth story for us and profitable growth is intact on a going forward basis.
I just add, Jeff, three points. 1st, I had a long time ago that when you're dealing with an entrenched competitor that has a high quality product, the only way you could hope to try and get any market share is on price. But I've also learned that those individuals over time learned that when you're losing on every unit, you don't make it up in volume. I think the third point here is that there was more price sensitivity this year than we've seen historically because of the pandemic and what people's income was and what they and how they look at it. I think it was yesterday in The Journal was an article where retail sales were starting to fall off again because people were concerned about the pandemic and the availability of funds.
So we see some of this as very transitory. We're going to stick to our strategy and are confident as it has prevailed all these years and catapult us into a leadership position. We will maintain
it. Thank you, Michael and Jeff. Our next question is a follow-up also from Ralph at Citi. You noted the 350,000 member decline on the exchanges. However, you entered a few new counties.
Can you give us a sense of your adds there and some other geographies that are key?
Yes. So we picked up roughly 100,000 members in the expansion counties. I think the important point about the expansion counties you have to remember is, some of those were in rural right? So it's not in the big population centers, but overall that expansion in our view was very successful. And again, I think the what we've targeted here is to say the real challenges were in South Florida and a lot of our other larger geographies we actually grew membership.
And so we're again confident in our overall strategy and product offering going forward.
Excellent. With that, we'll go to a question from Justin Lake at Wolfe Research. Can you please detail and give us some more information around the $400,000,000 in state take backs? Do you view this as a transitory dynamic, therefore moderating in 2022 and presenting an earnings tailwind? Or do you view these mechanisms as being more permanent?
Yes. Thanks for the question, Justin. Appreciate that. The $400,000,000 is really based on where we are today. Yes, I think long term, that does go away.
Obviously, when we get back into a more normalized, I would say, medical cost environment. I think when you think about the COVID and the pandemic and how we forecasted that, we've provided a lot of information today. And what I would say is, you can't take the $400,000,000 in its isolation. We've assumed lower medical costs for the first half of the year. We have incremental members because of the suspension of redetermination.
You have the $400,000,000 take back. We have, as you'll hear later in the program, we have some headwinds in the risk adjustment predominantly in the Medicare Advantage business really related to the pandemic. So I think you have to take all that together in context. And sitting here today, our view would be is you take all of these COVID effects and for our guidance that we provided today, it's a net push. So hope that helps.
Thanks for that, Jeff. Our next question comes from Ricky Goldwasser at Morgan Stanley. Can you quantify the COVID related headwinds incorporated into the 2021 guidance? And can you provide a bit more color on the competitive environment and specifically which geographies you're seeing that in?
Yes, I think maybe I just quantified a lot of the COVID headwinds. I've talked about those. Obviously, the state take backs, there's a meaningful headwind and I think other of our competitors have mentioned this in the wraps in Medicare Advantage specifically where seniors didn't go to their doctor this year and so there's a risk scoring that reduces your revenue next year. So that's definitely a headwind. So I think I've commented on those and the competition comment, I don't think there's anything that's changed with the competitive environment, specifically in the Medicaid side.
Obviously, we've talked about the marketplace business this morning and what we're seeing in South Florida. But generally, across the board, I think the environment is consistent with what we've seen in the past.
And then I want to just add for sake of argument that one has to look at the scale and size we bring to the market. And in a competitive environment with take backs and things we're worried about, we have the diversity and the scale to deal with it. And we have the capability in technology and others to find ways to continue to reduce costs as you'll see during the course of the day. So we see it we understand the competitive environment. The pandemic is something you have to go back to what, 19, 2018 to try and get any experience on.
And in those Middle Ages, it was very different. So this is something new. And I think, on balance, when you look at the performance this year, it's where we've been able to adjust to it very favorably.
Thank you both. The next question comes from Charles Rhyee at Cowen. Is the shift to a higher proportion of the marketplace members going to bronze products versus silver reflective entirely of what's going on in the 3 Florida counties? Or are you generally seeing price competition being highest in the silver category? Can you remind us if there is a margin difference between the metal tiers for Centene?
Yes. Thanks for the question. I guess what I would say is in Florida, we talked about our shift in bronze. Kevin provided those aggregate numbers. What we saw from new sign ups, so these are new members that are signing up, we saw a higher mix of bronze.
I think across total profile, it was 26% of new enrollees are choosing a bronze product, and it was substantially higher than that in Florida. So I would call out Florida as a geography that had a higher bronze selection rate than I guess the rest of the country. As far as the margin is concerned, obviously there's a lower premium there. So there's a dollar difference. And so I would say there's not a lot of difference in the margin profile on a percentage basis, but the dollars are obviously meaningful.
Thanks, Jeff. The next question comes from A. J. Rice at Credit Suisse. You indicated that your guidance does not include a contribution from Panther Rx.
If it closes as anticipated, will it be accretive to 2021 EPS? Is there any way to size the 1st year contribution and long term potential for the asset?
Yes, this is Jeff. I'll cover this at a high level and then later in the program you'll hear from Drew. But in general, it's a magnitude question really. Yes, we think it's going to be beneficial to EPS, but it's not really going to drive the bottom line just because of the magnitude of the acquisition. And then I think on the top line perspective, we're looking at close to $2,000,000,000 in total premium for 2021.
So and more to come in the second part of the session here.
I think importantly, Drew also, and I want to compliment on it that it just continues the diversification. We've always said one of our key strategies is to continue to diversify. And I think when you hear about it, you'll see how we have how he is diversifying in a very significant way.
Thank you both. The next question comes from Sarah James at Piper Jaffray. Centene is set within the exchanges with an eye for folks that go on and off Medicaid. This year that population is larger than ever before. How do you think about capturing that within the redeterminations group for the exchanges?
Maybe I'm confused about the question how to capture the people. I mean, in general, what's happening now on the Medicaid side is people aren't moving off of Medicaid because they are not doing the redetermination efforts, right? That's what's growing the Medicaid businesses. Individuals are still continuing on Medicaid and that's what we've seen and that's what we're projecting all the way through May of this year or next year, excuse
me. Yes, I think maybe this is with an eye towards the future in terms of once redeterminations are turned on, thoughts around capturing those lives as they become eligible perhaps for the exchanges?
Yes, certainly that's been part of our strategy from day 1. I mean, when we first entered the exchange market back in 2014, you remember we were focusing on the lower half of the FPL up to 2 50%. So that's what the business was built on. That's what we focused on from day 1. That's what we've grown this business from 0 members or 75,000 members in 2014 to where it is today to be the national leader.
And we're not done with that strategy. We're not discontinuing that strategy going forward. So in our view, we're going to continue to capture as much of that as we can and drive growth, profitable growth going forward.
We're also seeing an advantage where some people are finding that the marketplace may be a better alternative to the COBRA when they lose their job or leave their company. And so it's that's where our broader network is really going to come into play, we believe, longer term.
Great. Thank you both for the color. This is a follow-up from Charles Cowen relative to redeterminations. You are expecting Medicaid redeterminations to resume for May 1. Can you talk about the start dates for some of your biggest dates and when you expect those to resume?
I think the redetermination yes, I see what you're saying. You're saying that just because they're allowed to do redeterminations doesn't mean they will. I think that's the question.
That's right.
Yes, yes. Actually, I'll just give you the projections that we have. So we think we're going to 1,900,000 members by the end of April and then we think that we'll start to decrease thereafter as certain states obviously do the eligibility checks. And we think that's going to continue through the end of the year to where by December we're roughly at 900,000 members that are still left in the pandemic related growth. So I'm not going to give you by state, but I'll give you the aggregate number.
I think also one has to wait and see what the new administration is going to do, because there's a lot of talk right now in the pandemic relief fund that what funding the states get or don't get. And the fact they don't get it now doesn't mean that the new Biden administration won't give it to them. So that's part of the I don't want to call it choppy, but that's part of the things we have to deal with. And that's where once again size and diversity will come in play.
Yes, I agree with Michael on that. I mean, the May 1 assumption is really premised on extending the emergency one more time. So that could prove to be a conservative assumption.
Thank you both. The next question comes from Josh Raskin at Nephron Research. Where is the new competition in the marketplace coming from? Is it the large national players, blues and regionals or the new startups?
We're seeing it mostly from in most markets from the news for the startups. And that's why you see them coming in and out of markets from month to month based on what their funding and capability are. But these are some of them, there may be 1 or 2 that are in market, a Blues plan or something that we're trying to compete on price. But unbalanced, we're seeing the start ups do it and the ones that have the weaker balance sheets that we saw historically where they were using reinsurance to try and boost their balance sheet. So it's a short term play in our opinion.
Thank you, Michael. The next question comes from Scott Fidel at Stephens. Where within the 5% to 10% margin range on the exchanges do you expect to fall in 2021? And how much of a benefit do you expect from the risk adjustment payable change in exchanges in 2021?
Yes, good question. As we've done historically, I'm not going to quote a specific number in the range. However, what I will tell you is because of the risk adjustment payment decreasing year over year almost $800,000,000 it actually did increase the margin in the exchange business. One thing just to note is that individuals that don't have any health care cost codes, meaning somebody who doesn't go to the doctor at all during a year, those members aren't profitable. So what's happened is that risk adjustment decreasing from roughly $800,000,000 this year to roughly 0 is meaningful.
Thanks, Jeff. The next question comes from Gary Taylor at JPMorgan. Can you comment on expected Medicare Advantage margins in 2021, very strong enrollment growth, but you also mentioned risk score headwinds. Should 2022 MA margins improve materially?
Yes, I think you'll hear from Mike Polan later today about the solid growth that obviously we have going into 2021. And the premise of the WellCare transaction and we're obviously pleased with that growth and expect to continue to do that going forward. From the margin front, yes, I would say margins are a little bit lower than what we would traditionally expect just because of the headwinds on the risk coating. And we're really just going to have to see how 2021 plays out from the pandemic perspective and whether that goes away. But yes, long term, that is one of the key areas for us on margin expansion.
Great. Thank you, Jeff. The next question comes from A. J. Rice at Credit Suisse.
The company is adjusting its long term revenue growth target from double digit to mid to upper single digit. Is this simply a function of law of large numbers or is it a reflection of moderating growth in any of your markets such as marketplace?
I'll start and let Jeff pick up on it. Obviously, as the denominator gets bigger and bigger, the percentage of growth will be affected. And I remind people that we are basically talking about organic growth as as we don't include any acquisitions you heard earlier. And so we know they are in fact there. And so I would say and we're looking at international and other things with this growth.
So right now, based on what we know in the large denominator, high single digits seems to be a reasonable place to start.
Yes. The only other thing I would add to Michael's commentary is you have to remember that 70% of our revenue is still Medicaid related. And in the Medicaid business, you don't get 5% to 6% to 7% premium inflation every year, right? You've seen our rate adjustment for this year. And so I think it's both reflecting the size and scale of the denominator as well as the mix of business.
I think, Jeff, when Brent talks about his growth and shows the growth, I think people will get some reassurance that we are still very much a growth company.
Absolutely.
Thank you both. The next question comes from Steven Tanal at SVB Leerink. The midpoint of 2021 guidance represents a CAGR of 8% even with the WellCare deal included. How are you guys thinking about standalone Centene and how that would have grown? And what gets you comfortable with reiterating long term guidance of double digit EPS growth for the combined company going forward?
What does that algorithm look like today?
Jeff can start, but I want to remind everyone that from the point in time when we complete the acquisition, we don't talk about legacy 1 versus the other. It's really now all 100% Centene. We've taken that approach back to the inception. Jeff, do you want to add something?
Yes. I think as far as the path to double digit margin growth, as I sit here today, obviously, we just talked about Medicare and there's obviously margin opportunity there. The other piece is we've grown substantially as you saw on my slide today. We've grown substantially over the last 5 years and we really haven't realized the full benefit of that scale. And you'll hear later today from our technology team about what they're doing.
And ultimately, that is going to
drive cost efficiencies from
a going forward perspective. Additionally, just
to remind everybody on the WellCare front, dollars 500,000,000 net year to synergies, which would be 2021, dollars 700,000,000 run rate synergies that we're targeting for. And a lot of that work to achieve that to get to that $500,000,000 to $700,000,000 is actually happening in 2021. So as I look forward and look at the margin profile, I think there's plenty of opportunity to continue the double digit growth rate on the bottom line. And then today you notice I mentioned share repurchases were going to be opportunistic. I mean that's something new for us as well that would obviously trend us in that right direction.
Jeff, and when we don't chase price on marketplace and things like that, that becomes kind of another good indicator that we continue as we've said we will be focused on margins.
Absolutely.
Thank you both. Along the same lines, this question comes from Matthew Borsch at BMO. On the topic of intensity of competition, how does Centene see that evolving in Medicare Advantage, in PDP and in Medicaid as well as the group commercial or former Health Net business?
Yes. So there's going to be competition. I mean, obviously, it's competition and we continue to do well. I think once again, the one area that we've seen where people can say it didn't serve us well was in the marketplace. But that was priced, it's during the time of pandemic.
And I also remind what Jeff said, we're going to improve our risk adjustment by $800,000,000 So it's a matter of looking at the total picture. And I believe that this company has the focus and capabilities to be more than competitively generically as we've demonstrated against large and small competitors, but we're just not going to be price we're not going to follow prices to the bottom.
Very good. The next question comes from Kevin Fischbeck of Bank of America. You're excluding about $200,000,000 of transaction expense. Is this related to deals already announced or does this assume some meaningful additional activity?
That would be related to deals that are already announced. I mentioned the platform consolidation, so there's overlap work that heads into 2021. And then obviously with the Apixio and Panther's RX, RareRx, those are the 2 that are in there. So there's transaction costs there.
Excellent. Well, with that, we're going to wrap up the Q and A session and move to some additional content from our presenters. There'll be an additional Q and A session led by our operational leaders just after these presentations.
Good morning. My name is Sarah London. I'm thrilled to be with you on what marks the close of my first 90 days of employment with Centene. In recent years, you've heard about Centene's ambition to become a technology company that does health care. That vision is why I'm here.
We are at a unique inflection point in the digital evolution of health care, and transformation in this industry is going to require leadership. With 25,000,000 members in 50 states, representing some of our country's most underserved and complex populations, Centene is steward to a significant and unique set of data and insights. The opportunity to leverage this data and Centene's platform, not just to shape, but to lead the digital transformation of healthcare and to create an experience that delights our members and providers was too great an opportunity to pass up. I'm joined today by Mark Brooks, our CIO Brian Sivik, our SVP of Technology Modernization and Innovation and Darren Schulte, our new President of Advanced Technology. As a team, we have been designing the roadmap to accelerate Centene's progress against our technology mandate.
This morning, we'd like to share some of the key themes that will guide our work in the coming year. But first, given the benefit of relatively fresh eyes, I thought it might be helpful if I offered my perspective on the work Centene has accomplished to date. We all know that Centene has grown rapidly in the last 5 years. What that means from a technology perspective is that we have equally rapidly inherited and needed to consolidate a full complement of legacy technology platforms. It is a testament to Mark Brooks' leadership and the focused execution of Brandy Burkhalter's operational teams just how much integration work has been accomplished during that time.
In the last 2 years alone, the company has significantly streamlined our technology footprint in the areas of HR, finance, customer service, claims processing, care management and more. Integrated the data from our acquisitions into a unified infrastructure supporting enterprise wide reporting and analytics. While these are must do items, they are by no means easy to do. I fully expect we will build on this disciplined approach to integration as a key differentiator going forward. I've also found a thoughtful approach to the technology pipeline in light of a rapidly changing landscape.
The business and technology teams have prioritized critical foundational capabilities like data, which you will all come to find is one of my most favorite topics. They've capitalized on technology tailwinds and aggressively advanced us to a cloud disposition and they've built strong teams who are eager to innovate. You'll hear more about this from Mark and Brian, but I believe that we are now in a position to lead. In addition to my role coordinating technology strategy, I lead our Healthcare Enterprises Group. In light of that, I should note that the organization also recognizes partnering as an important strategy to take advantage of start up innovation and focus factories around some of these technology problems.
As many of you know, we have in the past leveraged healthcare enterprises as an incubation destination for early and mid stage companies pursuing technology or clinical models we feel will be central to our strategy. Our goal has always been to ensure that healthcare enterprises companies can continue to serve both Centene and their market customers with no cross contamination. Going forward, we will reinforce the independence of Healthcare Enterprises Companies, and we intend to pursue a pipeline of partners that advance our internal technology agenda and our desire to grow and expand the markets and mission aligned partners we serve. A great example of this is Apyxio, the acquisition of which we finalized just last week. Apyxio will join the Healthcare Enterprises Group and continue to operate and innovate independently.
We are excited about partnering with them to expand the applications of advanced highly calibrated healthcare NLP to make our business and our interactions with members and providers more seamless. On that note, I'm going to turn it over to Darren Schulte, formerly CEO of Epixio and now Centene's President of Advanced Technology to share his perspective on the partnership between Aphyxio and Centene and to give you a glimpse into how he's thinking about our advanced technology pipeline. Darren?
Good morning. My name is Darren Schulte and I'm very excited to lead the advanced technology team at Centene. But first, an introduction to my former company, Apyxio. Apyxio developed and refined a proprietary AI platform over the past 10 years to render computable data from clinical notes, administrative forms and other healthcare texts. Text in these notes contains 80% or more of the relevant information about individual healthcare, not contained in claims or other administrative data.
Epixio combines insights that render some text with structured data to create a comprehensive health profile known as a phenotype. These health profiles have been made available to applications for presentation and analysis. Now that Epixio operates independently within the Centene Healthcare Enterprises Group, we can leverage Epixio's AI capabilities and data science to advance our advanced technology efforts and enrich sensing applications and services. As such, we can create a better outcome for our members, less burden for our providers and more automation and efficiency for our business. Over the next 10 years, we envision the practice of healthcare to meaningfully change.
Technology will play a central role in healthcare, including the diagnosis, management and treatment of disease. Drugs and therapies will be developed and manufactured specifically for each person given their unique genome, proteome and metabolism and care will be provided virtually and in an increasingly non invasive manner. In this new world, Centene will be a trusted convener and partner in health and a leader in the discovery and use of novel approaches to bring about individual well-being throughout life. We intend for Centene experience to be unique for each person. Benefits will be precisely tailored to achieve the desired well-being.
There will be a lack of administrative friction, operational and payment activities largely automated in the background. We believe that future innovation in Centene is catalyzed through the creation of a healthcare learning and discovery platform. Our membership of more than 25,000,000 individuals and growing is diverse in a myriad of ways and their data provides unique insights with which to significantly advance healthcare. With rapid data collection, analysis and experimentation across our membership, we can better select and tailor our use of technologies and service to create optimal health as defined by an individual at each phase of their life. With our technology platform and our data foundation, we can learn what works in whom, when and under what circumstances, and we can then tailor benefits, care and delivery for each member.
And we can guide individuals to participate fully in their care and make better, more informed choices. To bring about this innovation, our advanced technology team will be comprised of world class data scientists, engineers, clinicians, designers, bioethicists and behavioral economists. However, research and development will not just be combined to just one team. We will infuse innovation and experimentation into the entire organization so that these behaviors become integral to a company's DNA. It is through these collective efforts that we will bring about a unique, personalized, digital healthcare experience for each member and we will learn from 1,000,000 to optimally care for 1, a technology company that does healthcare.
And now I have the pleasure of turning this over to my colleague, Mark Brooks.
Thank you, Darren. We're happy to have you as part of the team and thank you, Sarah, for acknowledging the success Centene Technologies has experienced in the last year. This morning, I want to share with you a little bit more about how we are implementing leading edge solutions that enable real time results. As Sarah mentioned, for Centene, the ability to integrate acquired platforms quickly has become a core competency, which we often refer to as our integration engine. But one example she didn't mention is how our infrastructure team leveraged this model to develop a hybrid data center cloud footprint in record time.
This is already leading to great results. Our core technology environment is not only able to manage meaningful integration of acquired assets, it enables rapid implementation of built and bought solutions. This capability is essential particularly as new solutions from our Advanced Technology Group, Digital Product Office and Healthcare Enterprises Organization are introduced into Centene as a platform, our technology ecosystem. And what's really interesting is it's had this ability for some time. However, with our new partnerships and structure in place, it will only move faster.
All of these efforts combined have resulted in Centene's environment becoming optimally responsive to growth and innovation. 1 of the best examples of a rapidly developed solution built upon our technology core is TruCare Cloud. This next generation application created in partnership with Centene Population Health has been swiftly deployed throughout the last 18 months, delivering new utilization management and care management capabilities to our teams. An industry best solution, TreeCare Cloud puts the health of members first by identifying and remediating care gaps. By leveraging real time data and alerts, it empowers cross functional care teams to engage and prevent escalating and potentially critical health issues.
TrueCare Cloud shares each member's individual story over time, including care plan progress, follow through for clinical appointments and interactions with, for example, behavioral health and digital care management providers. It uses data to ensure that each member has the knowledge they need to achieve an optimal clinical outcome. This level of sophistication is possible because TrueCare Cloud was born in the cloud, boasting complex feature integration built using human centered design. Its technology speeds workflow, enables omni channel communication, facilitates multi site care delivery and eloquently leverages powerful AI capabilities to automate assignments and schedule. As a key support system for care teams, its functionality is boosted by a holistic view of the members' health, including real time biometrics, lab results, medication lists and clinical claims visits.
Our approach to rapidly developing solutions upon our technology core does not stop with TrueCare Cloud. By using the same approach for call center, membership and claim systems, we were able to bring innovative technologies into the hands of end users faster than ever before. For example, our newest claims AI pilot has reduced processing time for pended claims from an average of 18 minutes to an astounding 3.5 And we have no plans to stop there. More innovative technologies will be delivered in 2021 to best meet the needs of Centene's members, providers and employees across the globe. Centene Technologies is humbled to be part of each member's care experience even from afar.
Through close partnerships with our business colleagues, we find new and innovative ways to leverage technology to do what Centene has always done, care for the most in need. And by implementing the right technology in the right place at the right time, we simply do just that, but better, smarter and faster. Thank you for having me today. And now I'm going to turn it
over to Brian. Thanks, Mark. When we think about what it means to become a technology company that does healthcare, one of the areas we will be focused on is restructuring our digital delivery capabilities in a product focused operating model. This will open up a number of opportunities for us, including a tighter alignment between our strategic and technology priorities, an increase in our ability to quickly and rapidly adopt digital capabilities across our local and scale model, and the opportunity to easily take advantage of cutting edge innovations in healthcare and other industries. We will be focused on streamlining our day to day operations, whether internal or those that touch and enable our key stakeholders.
And our technology agenda will ruthlessly automate administrative functions in the same way that other industries, like financial services have moved from manual paper based processes to an infrastructure for digital transactions. We will also be focused on building novel experiences that reimagine what it means to be a healthcare company in the next decade. It's always important to remember that technology without users is nothing more than a bunch of ones and zeros. And to this end, we're going to emphasize not the value of the technology itself, but the value of the impact the technology can have. And nowhere is this more important than in transforming our member and provider experiences.
So as an example, let's talk for a minute about our provider partners. As you all know, the industry is littered with failed attempts to bridge the payer provider technology chasm. It represents a massive opportunity, but to be honest, there are very few examples of it working well. However, one of many plans innovating right here at Centene is our Buckeye Health Plan in Ohio. The team at Buckeye rightly believes that their role is to enable and empower their provider partners along the journey to value based care.
They think in terms of risk sharing, not risk shifting. In other words, we're all in this together to create the best outcomes for our members. So how do they do this? Well, first, Buckeye recognizes the greatest way they can empower their providers is with data. To this end, they have contracted directly with the state's health information exchanges to pull current member level clinical data that they then integrate with their claims data.
This complete data set is hugely valuable to both Buckeye and to their provider partners as it allows the plan to close quality gaps through data without bothering providers to pull charts. In the last 2 years, they've ingested data from 18,000 providers across the state and they've been able to close thousands of care gaps for key areas of focus such as BMI, nutrition counseling for children and adults and diabetes care. In addition, Buckeye sends that integrated data set along with analytic enrichments back to their providers who can then use that data in their EMR or in their respective population health tools. We send it where they want it. In fact, Buckeye is so bullish on the power of this data that they offer financial incentives for providers to connect to and use the HIEs.
Starting in 2021, they plan to expand incentives with the goal of making this data available to 100% of their providers in value based arrangements. In addition to a focus on data, Buckeye recognizes that provider groups are already swimming in their own complicated technology ecosystem. And so instead of trying to add yet another requirement to the mix, Buckeye has established a technology enablement fund through which they offer grants to providers for tools that help them leverage value based data and transform their workflows to succeed under these advanced payment models. As a result of this approach, 100% of Buckeye's providers are now eligible for value based arrangements with 75% and growing participating in the programs and 60% of their Medicaid reimbursement is tied to value based performance contracted providers. Most importantly, thanks to the great work of these provider partners, the plane is a leader in quality outcomes.
Now, none of this is possible without a world class team to execute on an agenda. As you all know, this summer we concluded an agreement with the state of North Carolina, Mecklenburg County and the City of Charlotte to construct our new East Coast headquarters. This is a massive project, which when it's fully realized is going to create upwards of 6,000 high paying jobs in the Charlotte area. Over the course of the next few years, we're going to be hiring folks across Centene's diverse business operations. But most critically, we are focused on creating a world class technology hub.
We're going to hire technologists with a wide variety of skill sets, including front and back end developers working with the latest cutting edge tools, top talent in machine learning and artificial intelligence, human centered design specialists and product management specialists, all focused on delivering novel technology and powering our next phase of growth. We also take our local connections seriously. We will be partnering with organizations such as the Charlotte Regional Business Alliance and LaunchCode, a nonprofit that offers tech education to people with non traditional backgrounds and helps them find fulfilling new careers. We've worked with them for years in St. Louis and we're thrilled to expand our partnership to our new location.
So we're thrilled about our progress on our new East Coast headquarters. And once we've
returned to a more normal existence and the construction
is complete, we're Thanks very much. And back to you, Sarah. Thank you, Sarah. Thanks very much and back to you, Sarah.
Thanks, Brian and team. Hopefully, this helped provide a bit more generation technology ecosystem, we believe it is critical that we keep our end goal in mind. Yes, we want to be a technology company that does health care. But what does that mean? It means being able to grow and integrate seamlessly.
It means being able to streamline and automate our operations. But most importantly, it means creating an unparalleled and empowering experience for our members and providers. We must integrate, we must automate and we must delight. Thank you. I'll now turn it over to Shannon Bagley, our EVP of Human Resources to provide an update on our COVID safety protocols and return to work plans.
Good morning. My name is Shannon Bagley and I'm pleased to be with you. As you know, our employees' health and safety is our highest priority and we remain steadfast in our commitment to our workforce. From the early onset of COVID-nineteen, Centene leveraged its modern infrastructure and its agility to enable prompt decision making and swift execution of critical actions to ensure continued delivery of services to our members. While we operate well in this remote environment, as a growing organization, we are looking forward to the time when we will once again be able to engage in ongoing collaboration amongst our colleagues through in person interactions and shared experiences.
This morning, I'll share with you our comprehensive plans to keep our employees healthy and safe, including expanded employee benefits and resources, flexible work arrangements and new facility protocols. My overview builds upon the dialogue you've heard throughout the day, reinforcing our active leadership with our communities, our state partners, providers and members. As you may recall, Centene transitioned 90% of our workforce to a work from home environment in less than a week and this arrangement continues today. Several new employee benefits and resources which were established in 2020 will continue into 2021. Employees will receive 10 days of additional emergency paid sick leave and we will continue to waive prior authorization and cost sharing for COVID-nineteen related employee care.
Employees will have access to our medical volunteer benefit, which provides up to 3 months of paid volunteer time off. We will continue to offer employee well-being resources. And our highly trained COVID concierge and contact tracing team will be available for all COVID related questions. We also plan to provide employees with more flexible arrangements as we prepare to transition into an office setting later in 2021. Employee engagement is critical in our extended remote setting.
And in recent listening surveys, our employee engagement results exceed top quartile Fortune 100 benchmarks. Centene has offices across the globe and we decided early in the planning process that as we began to return to the office, we would do so in a conservative phased approach and in line with CDC recommendations, medical experts and local guidelines. Earlier this year, we announced that our return to office plans would be delayed until after April 1, 2021 for employees who regularly work in an office setting. As there is not a one size fits all solution, we established a return to office framework for our business unit leaders, enabling consistency in returning to the office, both in timing and approach across all of our offices. When we do begin to return to the office, we will do so in a multiple phased approach spread over a series of months.
In general, our plans consist of 3 phases. Phase 1 includes the return of 10% to 15% of the workforce. Approximately 30 days after Phase 1, we'll begin Phase 2, allowing for up to 35% capacity. And in the 3rd phase, we will allow for approximately 50% capacity. We anticipate being at half capacity throughout much of 2021.
To ensure healthy interactions, alternating work from home and work from the office schedules will be provided for our workforce. Over the past months, we've prepared our offices to reduce the spread of COVID-nineteen and have communicated new office guidelines to employees for both transparency and safety. A new daily self screening texting program will be utilized to reinforce symptom checking and to support decision making. In select locations, additional testing options will be available for the workforce. And we will also explore the possibility of supporting local communities with vaccination distribution.
All of our offices have been updated with new instructional signage to enable social distancing. While most of our cubes are 6 feet by 6 feet or larger in dimension already, we invested more than $20,000,000 to retrofit our cubes with acrylic screens for additional protection from the spread of respiratory droplets. In addition to signage and new screens, we've installed thermal temperature scanners for our high volume offices and have developed a dedicated contact tracing team for positive diagnosis. While we've laid the groundwork for new workforce and facility protocols, we are also designing for the future. We are leading the way in building the post pandemic workplace of the future, partnering with human centered design experts to enhance our facility designs, beginning with our Charlotte, North Carolina campus.
Overall, while there remains uncertainty in terms of how the pandemic will evolve, we are fully prepared to provide a safe environment for our employees when the timing is right. In addition, we will apply what we've learned during this time to enhance the working environment for all of our employees as we continue to evolve and build a thriving workplace for our workforce, both today and in the future.
Wow, it's been 6 months since we were last together and was still virtual. But hopefully the next time we get together, it will be in person. Earlier, he had the opportunity to hear from Michael on Centene's strategy of a local approach and a razor sharp focus on governmental healthcare. This strategy and philosophy has served us well from the beginnings all the way back to 1984 when we started in Wisconsin. Now, I'd like to show you a couple of examples of Centene's growth trends throughout the years.
Let's start with 2,004, 20 years after Centene began. In this slide, you begin to see modest growth at Centene entering Texas and Ohio through acquisition and Indiana through application. This next map looks very different. It shows Centene to date. Currently, we're in all 50 states.
In 2021, this will include 30 states for Medicaid Managed Care, 33 for Medicare Advantage and 22 for marketplace. And we continue to grow and innovate. This groundbreaking growth started with a bid back in 2,005 in Georgia, which was the 1st state to go from fee for service to mandatory Medicaid managed care statewide. Essentially overnight, the success of Georgia's transition created a domino effect that moved Medicaid managed care forward, making statewide RFPs commonplace. During this time, Centene continues to be at the forefront of rapid growth and adoption of managed care.
We also diversified through our exchange and Medicare Advantage businesses. Today, both state and federal governments have seen the benefits of our programs, including taxpayer savings, and most importantly quality healthcare outcomes. Our strategy of geographic and product diversification has led us to where we're at today. We see great opportunity in expanding and adding new products in our current states, entering new states and created approaches that are responsive to our customers' needs. Now, I'd like to take a moment to show you how this strategy has led to a very specific state growth.
One example is in the state of Illinois. We entered the state in 2011 with a small program in the collar counties around Chicago for the aged, blind and disabled population. Over the years, several more Medicaid aid categories were added to Medicaid managed care, including long term services supports and even foster care. And we also introduced our Ambetter product into the market. 9 years later, we've gone from 16,000 members to over 900,000 members.
Now that's growth. This growth was not only for product diversification, but also geographic expansion, growing from the Greater Chicago area to eventually serving members statewide. Clearly, geographic and product diversification has fueled our growth, But there is a third element to our strategy, a focus on governmental healthcare. As the Chief Business Development Officer, I realized that you have to focus on your customer. We've always made that a priority.
As you can see here, we have grown under every presidential administration, because we work hard to be responsive to the needs of our customers, both state and federal. Make no mistake, this is Centene's moment. We see this as another groundbreaking opportunity. Our size, scale and experience leaves us well positioned for continued growth and diversification. And with a new presidential administration entering, the opportunities are only growing.
Here, you can see our levers for growth. As I've discussed, our goal remains to enter new markets and maximize our current operations through product offerings and geographic expansion. We continue to see great growth opportunity in Medicaid with new and existing markets. We are a more recent entrant into Medicare Advantage, but the strength of our product through the WellCare acquisition is rapidly accelerating our growth. We will continue to be a leader in the marketplace product and look forward to seeing how the new administration strengthens the ACA.
Opportunities in federal services continue to grow, which I'll talk about here in a moment. We continue to believe in our healthcare enterprise business and also our technology solutions. And I look forward to sharing about our international growth in the future as we continue to make great progress. Now, I wanted to give you a glimpse in some of our current opportunities. With growth comes re procurements such as Ohio, where we submitted an RFP last month.
We continue to pursue new business opportunity in states that are transitioning from fee for service to Medicaid managed care such as Oklahoma. And I know you've all heard me speak to North Carolina in the past and we look forward to serving their Medicaid population when their program begins in July. But the state has already issued a second RFP that they call it tailored plans, which includes services for behavioral health, intellectual and developmental disabilities and dramatic brain injury populations. While there are great opportunities to grow in Medicaid, there's also an opportunity to grow our federal service offerings. As you probably know, Centene currently manages TRICARE West.
I'm excited to announce today that starting on January 1, we will begin to administer the TRICARE T 2017 pilot program in the Denver area. This pilot program will bring together administrative, medical and outcome based risk. This new approach focused on quality and care management will prepare us for even larger opportunity for the TRICARE T5 bid expected in the near future. Now, there is no doubt that 2020 has presented everyone with their share of challenges. And our relationship with our governmental partners has never been more crucial than during the pandemic.
We continue to find ways to offer support to all of our stakeholders as we navigate the COVID crisis. We've also maintained our focus of being a strong partner to our providers. Ron gave me one example in Ohio where we continue to find ways to support and partner with our providers. This has happened across all of our markets, where we're working every day to eliminate administrative hassle and develop and implement payment models that produce quality outcomes, pay our providers quickly and correctly, helping us to catapult to be the leader in value based purchasing. This is the same slide that I showed you back in June.
It remains true today that despite COVID and regardless of leadership in Washington, Centene is constantly evolving. We have assembled the skills and people needed to continue our drive toward growth, profitability and success. Our size and scale, strong balance sheet, partnership with providers, history and experience leaves us well positioned to continue to grow for many years to come. In closing, I have been fortunate enough to work for Centene for nearly 2 decades, focused on growth, both domestically and internationally. The company has recently added a few new responsibilities to my list, but we are and have always been a growth company.
To be a growth company, you must be focused on the customer. That customer could be state or federal governments or that customer could be our providers or our members, be they Medicaid, Medicare, insured or TRICARE. We will ensure our approach continues where quality and value are paramount to our daily mission. As we look to 2021 and beyond, our position for long term growth and profitability is better than ever. We look forward to continuing to look at all addressable healthcare markets.
We truly believe this is Centene's moment. And yes, the best is yet to come.
Thank you. I'm Dave Thomas, Centene's Executive Vice President for Markets, and I'm happy to have the opportunity to talk to you about my division. As Michael and Jeff said earlier, 2020 was a very successful year for the markets division. Despite many challenges, we have worked closely with our providers and regulators to manage through the COVID pandemic and effectively support our members. As a result, we have been able to bring on 1,600,000 new Medicaid members while keeping our WellCare integration activities on track.
For 2021, we expect continued growth and a slow return to normality and improved operational efficiency. The markets division currently serves 17,100,000 members across all product lines, making Centene the leading provider of government programs healthcare in the U. S. We now have 13,400,000 Medicaid members across 30 states, 1,000,000 Medicare members across 31 states and 2,200,000 marketplace members across 21 states. In all, our membership has increased 50% year over year.
This is primarily a combination of WellCare integration and COVID related growth
with most
of the COVID related growth due to the suspension of member redeterminations. There were many highlights for the division this year. These include the implementation of Illinois Youth in Care in 2 phases, the first in February and the second in September, the successful integration of WellCare's New York membership into Fidelis on June 1, the successful completion of our acquisition of Next Level Health in July, the implementation of Medicaid expansion in Nebraska on October 1, and the successful re procurement of our business in Kentucky. During 2020, we continue to build on our strengths and drive value in spite of the many COVID related challenges we faced. In response to COVID, we successfully transitioned over 90% of our workforce to work from home over a period of just a couple of weeks back in early March.
We accomplished this while providing uninterrupted service to our members and providers. In fact, we were featured in the World Economic Forum's Workforce Best Practices Report for our COVID-nineteen response. We did all of this while maintaining high levels of member and provider satisfaction. Throughout the year, we distributed almost 7,000,000 pieces of PPD to safety net providers, waived prior authorization and cost sharing requirements committed over $13,000,000 to fighting hunger. Unrelated to the pandemic, we were also very involved in the Louisiana hurricane response, distributing 360,000 meals and 65,000 bottles of water, while maintaining uninterrupted call center operations.
In addition, we have continued to improve operational efficiencies. We have done this by combining best practices of Centene and WellCare legacy organizations, while continuing our drive for technology advancements and process improvement. For instance, we upgraded our clinical management system and committed $18,000,000 to enhance telehealth for FQHCs and other providers. This commitment to supporting telehealth is a direct response to COVID related challenges. Starting in late February, telehealth claim volume increased over 3,000% as the pandemic accelerated.
Volume has come down somewhat over the past several months, but it's still much higher than historical averages and we expect telehealth volume to continue to exceed historical levels going forward. In short, virtual care is yet another option in the wide array of care options our members are able to access. There also has been a dramatic increase in telehealth assessments as a percentage of all marketplace assessments as well as a 50% to 60% increase in the number of assessments completed overall. We expect that this will benefit the marketplace product risk scores going forward. After a successful 2020, we now turn our attention to 2021.
We have several core objectives for the coming year. These include increasing provider engagement, expanding value based contracting, improving clinical quality and member satisfaction, enhancing medical management, improving operational efficiency and driving innovation at the market level. These objectives are interrelated and codependent and achieving them will allow us to reduce medical and administrative costs, strengthen our relationships with our regulators, enhance revenue and improve quality. As a result, we expect 2021 to be a year of continued growth and development for the markets division. Thank you.
And I will now hand things off to my colleagues to talk about other aspects of the business.
Hi, everyone. It's great to be here today. I'm Mike Collins, Senior Vice President of Medicare. I'm pleased to present to all of you for the first time since joining Centene as part of the WellCare acquisition. It certainly has been a unique year, but it hasn't slowed down our ability to reposition the Medicare business heading into 2021.
I'm going to spend a few minutes today discussing our growth outlook, how we've used 2020 to position us well for 2021 and highlight a few of our longer term opportunities. So let's start with growth. You can see on the slide, this business has continued to develop and we feel confident about our ability to grow into the future. With AEP coming to a close, we're pleased with our current performance and we're optimistic about our positioning for the upcoming year. Now as you heard from Jeff, we expect our 2021 growth rate to be above industry with a full year target in the mid teens and as we think about longer term, we expect to be positioned to continue to grow above industry.
With this year's acquisition of WellCare, you can see Centene's Medicare business now operates at national scale, offering products across the full Medicare continuum. As part of our multiyear strategy, we'll continue to expand into attractive new markets, go deeper in each of our existing markets through further product development and increase our overall duals market share by leveraging our number one position in Medicaid. So as we talk about national scale, it really does matter. 87% of Medicare Advantage growth since 2015 has gone to plans with a 1000000 members or more. Centene now has that scale and we're starting to see some of the benefits.
Our distribution model has matured. We're gaining focus and real partnership from the large established FMOs and teledigitals. This is allowing us to become more efficient with our sales strategy and drive larger enrollment share. Brand awareness is increasing, which plays an important role not only in member selection and retention, but also in strengthening key provider and broker relationships. Our scale across multiple businesses provides us increased provider mindshare and allows for us to partner with new providers in more meaningful value driven ways.
And finally, scales allowed us to create more competitive unit cost positions and overall G and A leverage, which we can use to invest back into the business. Now, while it's been less than a year since the WellCare acquisition, we've been able to move quickly to integrate the 2 organizations and drive results. We used the WellCare acquisition as an opportunity to bring additional Medicare expertise into the organization and reorganize the operating model to improve overall execution. With these changes, we were able to quickly achieve several objectives. You see a few of the highlights on the slide.
We made significant strides on broadening our distribution network and increasing our overall enrollment bandwidth. We executed on increasing our footprint and going deeper in markets with comprehensive offerings. And finally, we jumped on the synergy opportunities within our cost structure and turn that into meaningful value to support our 'twenty one positioning. Now, while we're executing very well heading into 2021, the most exciting thing about our business is we still have a long runway to drive both growth and profitability. 1st, related to STARZ, we have material upside on our STARS program.
We're enhancing the playbook and making additional investments into the program, which will translate into real value over the next few years. 2nd, we still have attractive geographic and product expansion opportunities in front of us. This will allow us to access more beneficiaries and drive more share in those markets that we operate in today. And finally, I want to highlight that we have a large base of highly qualified leads from our PDP, Medicaid and marketplace businesses that will look to cross sell into our higher value Medicare products. In closing, Centene's Medicare business looks very different than it did 5 years ago or even 12 months ago.
We now operate a Medicare business at scale with an experienced management team and full enterprise commitment. We've quickly transformed the business into a national leader through strong focused execution. We not only are optimistic about our positioning for 2021, but as I've shared, longer term, we have some very actionable opportunities that will drive strong growth and profitability over the next several years. Thanks for your time.
Hi, I'm Drew Asher, Executive Vice President, Involve Health. It's great to engage with you again, at least virtually. We thought it would be instructive to give you some insight into the breadth of Centene's pharmacy capabilities and how we've been leveraging them for the benefit of our businesses. And then review what we've been up to, but more importantly, where we are heading, including the recently announced acquisition. Centene has branded its pharmacy capabilities as Envolve Pharmacy Solutions, wholly owned by Centene.
Under the Envolve Pharmacy Solutions umbrella, we have 4 businesses. 1st, a large PBM managing over $30,000,000,000 of pharmacy spend on behalf of our Stenting businesses, with clinical capabilities driving Stenting forward quality and HBR initiatives. 2nd, a specialty pharmacy with over $3,000,000,000 in revenue, 13 dispensing pharmacies nationally and over 150 limited distribution drugs. 3rd, the market leading standalone PDP business with over 4,000,000 Medicare PDP members and finally, PBM capabilities on multiple platforms serving other payers and employers. The most important asset though is the pharmacy intellect and operating acumen of our 3,200 employees in Involve Pharmacy Solutions.
So what have we been up to? Quite a bit in 2020. We have delivered on the critical pharmacy related synergies supporting the WellCare transaction and have successfully merged Exactis, the WellCare specialty pharmacy into a carrier health, the Centene specialty pharmacy, cross leveraging limited distribution drugs, purchasing and patient basis. And we've been focusing on the best of breed for clinical initiatives into our health plans. Of course, where we're heading is more important.
We expect to deliver incremental synergy in 2021 as planned for in the WellCare transaction. Most of the work on this has been underway during 2020 and there are plenty of clinical initiative opportunities ahead. We're excited about continuing to deliver value to seniors through our low cost PDP products. And despite some competition in the value space, we like our positioning, which has always been rooted in multi year sustainability. And we continue to work on rationalization of PBM platforms.
We will consolidate over time both internal and external platforms. On the topic of where we are heading, we're actually putting some capital to work to drive growth in the pharmacy space. Earlier this week, we announced the acquisition of Panther, a specialty pharmacy focused in the rare and orphan drug space. This specialty pharmacy serves some of the most complex members similar to Cettine. We expect this to be a high growth business, both top and bottom line, given the market and Panther's positioning as a leader.
But most importantly, it adds a capability to involve pharmacy solutions that bolsters our expertise in serving medically complex patients and members. The vast majority of Panther's revenue is from 3rd party payers, which will continue as we work closely with pharma manufacturers of these often life saving drugs. So while we were certainly focused in 2020 on executing and integrating, we did not lose sight of opportunities and investments for 2021 and beyond. Thank you.
We are now ready to start our second question and answer session, where members of our operational leadership will take your questions. Our first question comes from Lance Wilkes of Bernstein. Can you talk to strategy on leading with an owned PBM versus outsourced support from PBM partners and using your AdvancedRx partnership? In particular, what capabilities are being used from each and how are you positioned for carve out PBM opportunities?
This is Drew Asher. Thanks, Lance for the question. As I mentioned in my remarks, we're in the process of evaluating all of our internal and external platforms. And we're doing this unlike 2 years ago, we're doing this looking through the lens of an enterprise at scale that has $30,000,000,000 of spend plus and multiple assets across the pharmacy ecosystem. So that process is ongoing, and we'll be spending time in 2021 on that.
Excellent. Thank you, Drew. This next question comes from Josh Raskin at Nephron Research. How are you thinking about the integration of behavioral health services as they grow in size and importance? Also, how does this influence your thinking about specific populations like the severely mentally ill?
Now this question, Michael wasn't going to participate in this operational Q and A. He's been talking a lot about behavioral health. So we're going to ask him to take this one.
Thank you. As I said, I was going to try and be quiet and silent, but it doesn't work out that way. Behavioral health is of growing importance to us. The board and I have had a lot of discussions about it. And by example, Josh, we say that somebody is a newly diagnosed diabetic, after they see their endocrinologist, they should go see a psychologist and help them understand how to deal with it.
We hear a lot of postpartum and OBCs, a woman who thinks could use some psychological help before she leaves the hospital, get it done. The SMI population is growing and there's a need. What's really interesting and I think very important is that there was a time when behavioral issues, there was a cloud over them, it's not something you want to admit to. That's not the case anymore. People are willing to recognize they have the issue.
And I think the fact that we're integrating it into the health plans, carving in and not out, is going to be important. And we're going to continue to build our capabilities in that sector and recognizing how important it is.
Michael, can I add to that please, sir?
Many of
our states are asking us to serve not just traditional behavioral health, but also for the SMI population. Now we've been honored to actually serve the SMI population in Southern Arizona since 2015. At the same time, there are certain states like Arkansas that is asking us some partnerships to serve the population. There's many of our contracts like in Iowa and Kansas that we have the opportunity to serve the population of SMI. And there's even states like North Carolina that has an RFPL right now that the tailored plans where they're looking to the local LMEs to partner with the existing plans such as we have in North Carolina.
So with this, there's tremendous opportunity we've had and tremendous opportunity in the future to really provide value and outcome for this population.
And if I could just add one other quick thing to that. We're working with several partners to implement telehealth capabilities across behavioral health. And we actually see this as a huge opportunity to serve our members where they are. And one actually really interesting data point and this is very early data, but while we've seen virtual care visits normalize to a certain extent from the highs that they hit during pandemic, Behavioral health adoption in the virtual care setting actually continues to grow. So we are looking at this as a real opportunity to serve our members.
Great. Thanks, everyone. Our next question comes from Scott Fidel at Stephens. Can you provide some more details on the mid teens enrollment growth in MA? Are there any products that are driving this growth or any geographic areas in particular driving the growth in Medicare Advantage?
Hi there. So as part of our overall 2021 strategy, we were focused, as you heard, on really developing an enhanced comprehensive product portfolio with the idea to be able to have products available to all different types of demographics. What we've been pleased with is we're seeing very consistent growth across our different product offerings and across all of our geographies, which is continuing to give us optimism as we go into 2021 around our overall growth opportunities.
Great. Thank you, Mike. This is also a follow-up from Scott Fidel. Can you specify around the decline that you are expecting in PDP lives and how you see PDP margins trending year over year in 2021?
We're actually really pleased with the absolute level of PDP membership. We've always anticipated when the members had the first opportunity to reexamine post the Aetna to WellCare implementation, which was January 1, 2020, that there will be a little bit of attrition. So embedded in our guidance is 4,000,000 plus members. We believe that's what will come out through ADP and really like our positioning with the low cost products and supporting the administration also in terms of the some of the pilots, including the insulin pilot.
Great. Thank you, Drew. Our next question comes from Gary Taylor of JPMorgan. Can you comment on the renewed deferral of care that is offsetting the sizable acceleration of COVID hospitalizations? The comments seem to imply that October November MLR might have been trending better than expectations.
Given your first half, second half EPS cadence, it sounds like you may have concern that direct COVID-nineteen expenses could overtake the deferred care benefit.
Yes. Thanks, Gary. This is Jeff. Actually, what we have seen, I think the piece you're missing there is the revenue component. So remember, we last talked in October at our Q3 earnings call, we said we think the full year rate adjustment, the retroactive rate adjustments were going to be $500,000,000 Now we said, well, no, it's $790,000,000 So it's a lot larger.
And so what we have seen, I would say, in October, November is this total overall lower cost. So yes, you have higher COVID costs, you have lower non inpatient, but net total, if you just take the medical cost line, it's below the historical average and that's what's allowed us to absorb this additional 290,000,000 in the Q4. We are assuming heading into 2021 a lower level of utilization. I would say not as much as the October, November phenomenon that we've experienced so far this year.
This next question comes from Josh Raskin of Nephron Research. It has been a long time since Centene has bought back stock. Is the comment today about the evolution of the company and capital deployment or more about the current stock price?
Yes, I think the first thing is that you have to do these stock buybacks under a 10b5, and so we don't actively have a 10b5 in place. But I think what we're signaling is we will be opportunistic. And going forward as we look to deploy capital and try to drive that bottom line on the double digit growth percentage that we're talking about today, that's an option and an opportunity. Again, you're going to have to compare deploying capital on that to all the other growth opportunities that you heard from Brent today and all the other avenues that we have to deploy capital into technology. And so but we're going to be thoughtful about that.
And I think it's an option for us on a going forward basis that we haven't used historically.
The next question comes from Kevin Fischbeck of Bank of America. You talked about the $400,000,000 STARS opportunity. How long will it take to get there? And given COVID disruption, is there any ability to improve before 2023?
Hi
there. So as we know, STARZ is a multi year program and it's got a performance lag built into it. But that said, we are focused on continuing to enhance the playbook. We're making additional investments that are really geared towards the changes in the overall star structure with the increased focus on customer surveys and administrative measures. And we'll continue to accelerate our performance.
To COVID, absolutely has some impact as you think about being able to progress quality over the next year. But as we think about what I said around enhancing the playbooks and really thinking about additional investments, we do see the ability to accelerate our performance and to see good results in the coming 2 years.
Thank you, Mike. The next question comes from George Hill of Deutsche Bank. Can you talk a little bit about the Panther Rx acquisition and why you felt it was important to have your own specialty fulfillment capacity as opposed to leaning on your pharmacy partners?
Yes. Hello, Dan. Actually, we've been in the specialty pharmacy business since 2013 with the Acheria Health acquisition. That's been a great business for Centene, and we're now about $3,000,000,000 in revenue before the Panther acquisition. This is a great business on its own merits, but as the leader in government programs, including medically complex populations, beyond just the benefits of owning it for the business itself, We think we'll better understand the specialty pharma pipeline, clinical requirements, cost management aspects of these high trending items.
And then it's yet another member engagement opportunity for those Panther patients that happen to be some team members. So we're really excited and can't wait to close the transition and welcome the Panther team.
Thanks, Drew. The next question comes from Kevin Fischbeck of Bank of America. Is there any way to quantify the risk score headwind? Can that be completely overcome in 2022 either through coding or benefit design?
Yes. I'm not going to specifically quantify, I mean, the exact headwind. Obviously, I think you have more time in order to get the codes in and it depends on how many of our members actually get to the doctor between now and the end of the year which obviously we're trying to facilitate. So we've got an estimate in the forecast. It's and I'm just not going to get into the details because we don't know the final number yet.
Yes, and as far as the headwind heading in, yes, there was a second piece of that question. It depends. It really depends on the pandemic. I think as Mike just mentioned, it really depends on how the pandemic progresses into next year, how long it goes. I mean, obviously, I think it's the same thing on the quality story.
I don't know, Mike, is there anything you'd like to add on that?
The only thing I would add is, as we think about our positioning for 2021 and setting the bids and the plans is that we did expect a risk adjustment headwind due to COVID. And it's in line with our expectations as we're moving into 2021.
Great. Thanks both. The next question comes from Dave Windley of Jefferies. On telemedicine, did that growth come primarily through dedicated telemedicine companies or via video enablement of your existing network providers? How are you proceeding with reimbursement of telemedicine?
Thanks for the question. We can get you more details after the event. But in general, we're working with partners to enable telehealth across the board. As everybody knows, this is sort of a new world that we're in today and we're seeing, as I said before, increased adoption of these capabilities, particularly in the behavioral health space. The reimbursement models that we're looking at are everything from standard reimbursement through to some pretty interesting experiments on the full risk side of the equation.
But again, these are early days and so we have a lot to see and learn as we go through it.
Thank you, Brian. The next question comes from Steve Valiquette of Barclays. You talked about Medicare now operating at national scale. Combining this with $100,000,000 costs removed in Medicare cost structure, should we assume that Medicare margins will stay relatively steady going forward beyond 2021 or is there room for some expansion?
Yes, I think you heard that Jeff touched on this earlier. Absolutely, as part of our long term strategy, we will continue to focus on driving growth and profitability. And as I mentioned, we have several opportunities in front of us that we can execute to drive both growth and profitability. And we talked about STARZ already. We talked about the opportunity to continue to grow the business through geographic and product expansion and then continuing to be able to leverage the other businesses and to be able to drive scale with the new national size that we have.
So we will definitely expect long term to see growth and profitability continue to expand.
Great. Thank you, Mike. This next question comes from A. J. Rice of Credit Suisse.
Services revenue are on track to generate $3,800,000,000 of revenue for 2020 and the company indicated that specialty pharmacy represents $3,000,000,000 of revenue. How should we think about the growth of your other businesses that account for the remaining $800,000,000 What are the growth opportunities and expectations for these?
Yes, real quick, I would say year over year, this is absent obviously, the guidance is absent the transaction that we've been talking about here with Panther. But what I would say is consistent year over year. The other piece of that is Centurion. So obviously there's definitely growth opportunities there. We've won contracts in the past, but right now in our guidance we've assumed consistent service revenues on a year over year basis.
Thanks, Jeff.
This next question comes from Gary Taylor at JPMorgan. Many have hypothesized that a Biden administration might seek to cut Medicare Advantage rates or risk scoring since the Obama Biden administration did so. Do you believe the change of administration carries material risk for MA?
So we look forward to working with the new administration. And what we've seen is support on a bipartisan level. We've heard from Biden that he's supportive of the private healthcare sector. And I think when you look at the value that MA has been able to show over the last several years, as it relates to being able to control costs to improve quality and to see the overall popularity of the program continue to increase, we think that MA will still be a very strong industry and we see good strong growth even under the new administration.
Great. Thank you, Mike. This will be our last question. This question comes from Eric Percher at Nephron Research. Drew, could you provide some perspective on the overlap of orphan disease focus at Panther and the CNC populations?
Yes. So the Panther's revenue stream, only about 5% of it today, is from Centene or Centene affiliate members. And obviously, we expect that penetration to grow over time. So it's a business that serves both 3rd party payers, 3rd party PBMs, works closely with manufacturers of these often lifesaving drugs. And we'll get to further penetrate the Centene book much like Akeria Health has done over the past 7 years and performed really well on behalf of Centene and its 3rd party payers.
Great. Thank you for that, Drew. Thanks to the team for the answers and thanks to the analysts for submitting your questions. We will now move to a break. We will return to programming at 11 o'clock Eastern for our political panel led by Jonathan Dinesman.
Welcome back. As we have done over the years, we have included a political panel of esteemed experts who can really truly give you a true idea in terms of what we should expect as we go into 2021. Obviously, we are looking forward to working with President-elect Biden and his administration as well as a new Congress as we continue to make sure that we're providing high quality care to all Americans, especially our most vulnerable citizens. With us today are Haley Barber, who is founding partner of BGR Group, also former Governor of Mississippi and the former Chairman of the Republican National Committee. We also have Cindy Mann and Cindy is a partner at Manette Health and she was also the former Director on the Center on Medicaid and CHIP Services.
Last but not least, we have Andy Slavitt. Andy is Senior Advisor for the Bipartisan Policy Center and former acting administrator of CMS. Before going to the panelists for their views in 2021, I wanted to spend a brief moment in terms of how we see things at Centene. As Brent Leighton mentioned in his remarks, Centene has done incredibly well working with both parties. When we first look at our strategy, it's based on one simple premise and that is good policy is good politics, which allows us to work across the aisle with both parties.
There was a time I stood before you all and President Obama had just won election with a Democratic Congress. And there was a lot of uncertainty in terms of what would the Democrats and President Obama do in terms of the healthcare delivery system. Obviously, they passed the ACA and we did we've had incredible success with working with that administration and continue to do so today within the construct of that ACA. Then there was President Trump. President Trump also came in with a Republican Congress.
And the questions and uncertainty really kind of focused on what would repeal and replace look like, would they
be able to do so
and what would potentially a new healthcare delivery system potentially a new healthcare delivery system end up as? Obviously, over the last 4 years, once again, Centene has been able to show working with a Republican administration and then what became a split Congress that we can work across the aisle. Now we've got President-elect Biden and President-elect Biden is coming in off the premise of strengthening the ACA. That's what made him so different than his Democratic counterparts running for President at the time. In addition, the one thing that's quite certain right now is even though we don't know the outcome of the Senate due to the Georgia Senate races, what we do know is that there's going to be a smaller majority for the Democrats in the Senate.
And however, the things play out in the Senate, we're going to have a smaller or maybe a fifty-fifty split in the Senate. What that means is that those in the middle, the moderates on both the Democratic side and the Republican side are going to have the greatest strength. And we've already seen that with how they were really the ones who were able to get up and running another COVID package for discussion. So we're very excited in terms of what the opportunities are out there. We've seen on the Medicaid space that Republican and Democratic states, conservative, non conservative, that in terms of the states, states such as Idaho, Nebraska, Utah and Missouri have gone to Medicaid expansion.
We'll clearly be watching to see what other states may be looking at more coverage on that front. We're clearly confident that we're expecting President Biden, President-elect Biden to work at strengthening the ACA via regulatory means and potentially via legislative means. The one thing that is certain through this process is that in government care, both parties are focused on making sure that people have access to high quality affordable coverage. And it's going to be those companies that work well with government that are best positioned. And that's why we're so confident at Centene.
So with that, I would like to start off with going to Haley Barbour to give us his perspective in terms of the elections.
John, thank you. I should say to start with that John tells me I've got 5 minutes. When my accent, I can barely say hello in 5 minutes. But I'm going to do the best I can. I was pleased to hear John's comment, good policies, good politics.
I was the Director of the White House for Ronald Reagan's and that was one of his favorite expressions. Let's go back by job to start off, let's look at 2020. Never been any year in our lifetimes like this literally. And it's across the board, unbelievable. The 1st 2 months of the year, we had gigantic economic growth.
We had the lowest unemployment in 50 years. We were seeing incomes go up, particularly among lower income people. And then COVID came in March and within a few weeks, the whole thing turned around to where by late in the spring and early in the summer, we had depression like, literally depression like unemployment. And not only people losing jobs, businesses closing down. An unbelievable, unforgettable economic downturn.
And at the same time, politics for the presidential election was going on full speed, though not in normal ways. You'll remember that the news media and most of the pundits predicted that this would be Trump would lose and that this would be a blue wave that the Democrats would really have a big election this year. As the year went along, polling seemed to reinforce that. Democrats out spit the Republicans in numerous ways and in numerous states. Almost every Republican Democratic senator incumbent got outspent, where normally incumbents outspend their challengers regardless of party.
But at the end of the election, when all was said and done, Trump did lose. And I say that because I'm one of those who believes that in 2016, it was less a matter of Trump became President because he won then it was a matter of he became President because she lost. And we saw that replicated this time. Biden won, but more as a matter of Trump lost than Biden ran the superior campaign and won. Interestingly about that, Biden got 306 electoral votes in defeating Trump, which is literally exactly the same number of electoral votes that Trump got in defeating Hillary Clinton.
It was the largest turnout in American history. Donald Trump got almost 75,000,000 votes. He got the most votes of anybody in the history of American presidential politics except one guy, Joe Biden. And Joe Biden won the election by several million popular votes, but the electoral vote was relatively close, as I say, tax 270, he got 306. The Democrats were anticipating, as John said, to take over the Senate.
In fact, that did not happen or has not happened yet. In the Senate races that have concluded, the Republicans have 50 and the Democrats have won 48, which means that the 2 Georgia seats are determinative. If the Democrats win both Georgia seats and make a fifty-fifty tie, then Vice President Harris will break the ties. If either or both of the Republicans win, then the Republicans will have a majority. And this is very important because many on the Democratic left and some including the President, talked about major, major changes in procedures like doing away with the filibuster, statehood for D.
C. And Puerto Rico, the New Green deal and you can go down the list of different things that they say that they would do if they have the majority and we'll see. So this is a very consequential pair of elections down there the 1st Tuesday of January. In the House, again, all the predictions were that the Democrats were going to carry the House by a bigger margin. They had a margin of about 40 seats.
Instead, looks like they're going to end up with a majority of around 10 seats. Right now, there are 2 elections that have been contested and are not decided for that reason. And it means that the Democrats have 20 to have 222 and the Republicans have 211. So very close and that was one of the reasons that John made the point for us, moderates are going to have a whole lot more power if party voting is not just put hard into place. And with so many moderate Democrats, almost all of their pickups where they did have them were moderates.
The Republicans didn't lose any seats in the House. So we're going to have a close time here. Let me just mention, Republicans picked up 1 governor, won 8 out of 11 governors' races for a net gain of 1. Republicans now have 27 Democrats 23. The Democrats did not win 1 House in the state legislature.
Some of you may remember that President Obama, about 3 years ago, pronounced his attorney, former Attorney General, was going to be running a program to take Democrat victories in the state legislatures, because this year is the census and that means reapportion of the U. S. Congress typically done by the state legislatures would happen in the wake of this election. As it turned out, there was another big green wave that went kaput. The Republicans did not lose one house in one legislature in the United States.
So that's how we come back into here. I want to just make a couple of closing points. Historically, in the United States, when we are at parity between the two parties as we are now, usually, we're at parity and everybody's bunched up in the middle. That was the case in 1960, the case in 2000. It has not been the case for the last few years, the Trump administration, the Obama administration, maybe the last part of the George W.
Bush administration. We have been at parity, but there's been no middle. The question is, is this new arrangement where you've got the Democratic Party has gone through alerts to the left and then did not have a very good election. And in fact, the guys that did the best for them, guys and gals, where they're moderates, they're centrist. Are we going to see that movement to the left continue?
Or are we going to see a move back toward the middle? Certainly, President Biden gives the impression and I have no reason to think it's not totally accurate that he would like to govern more from the middle than the left. We will see. I will say this about Centene as I close. I was Governor of Mississippi in a very hard recession, 2007, 2008, you all remember well.
And one of the things that governors and people that have to deal with health care and big health care issues and spending, they're looking for people that want to treat them fairly. And we learned that Centene was a great partner. They helped us save money. They kept their word. They were innovative.
We first allowed them to come in and with another company and we let them have 15% of our Medicaid population under managed care. Before I went out 4 years later, that was up to 85% under Managed Care. And it is because of the results and because of the effort primarily that Centene made to make this go forward. Hopefully, that is the kind of outcome that a bad administration will have because they will have to rely a lot on states because of the state programs. And I'm sure that they would like to see everybody go to Medicaid, expanded Medicaid and go forward from there working together.
Interesting time to say the
Well, thank you so much, Governor. And next we will go to Cindy Mann.
Yes. Okay. I'm going to thank you for having me, and great to be with you all virtually and always informative to hear Haley Barber and his take on the world. So I appreciate that. I'm going to focus a bit on Medicaid, obviously, an important area for Centene.
And I'm going to look at 3 different areas, just to give you a little what's going on in this budget and enrollment, what's happening or could be happening on coverage expansion and then specifically on managed care developments. And for each of those areas, because Medicaid is, of course, as you all know, a unique federal state program, I'm going to talk a little bit about it from the state vantage point and then hit on what might be the likely or issues or issues to watch for in terms of a Biden administration and a new Congress. So let me start with the budget and enrollment issues. So obviously, at the state level, everything has been COVID, COVID, COVID. That's been true generally for states, and that's true excuse me, specifically around their Medicaid programs.
So that's affected states in a number of key ways, as I'm sure you can all imagine. But let's just talk about budgets first, right? Coming off of several years of budget surpluses at the state level. States are seeing big changes on the budget side and big changes also on the enrollment side. So let's take budgets between March August of 2020.
State tax collections were 6.4% less than the same months in 2019 on average. So that may not sound like a deep dive, but for states that have balanced budget requirements, that's creating really significant dislocations in their budgets. And I will say, when you look across the states and you look across and you look at the state projections going forward for 2021, it's pretty uneven and also very difficult for states to project. So I think a lot about the state budget story is deep budget problems, but the duration and the depth is going to be both varied by state and difficult to project. Let's look at enrollment because Medicaid, as you know, is such a big part of state budgets.
And the size of the Medicaid program, therefore, has a lot to do with how well states can meet their obligations in a constrained budget environment. So we typically see rising Medicaid enrollment when we have a downturn in the economy. And as Haley talked about, we certainly have a downturn in the economy, unexpected as a result of the pandemic. It was a little bit slow to kick in and a little bit uneven, but and right now, we still don't have national enrollment data on Medicaid. But look, we've been looking at the state data.
And if you look at the states that report through November, overall enrollment for Medicaid has increased by about 12%, but big ranges. That's the Navidean state, some states 20% or close to 20%, some states at 6.5%. So that's the range. But if you look at the non elderly, non disabled adults, which is really the key group that would be impacted by the downturn in terms of job losses and loss of health insurance coverage, your both expansion adults and the non expansion adults that states are otherwise covering, much deeper enrollment growth that we're seeing. So in the median state, for expansion adults, about 22% growth and for non expansion, nondisabled adults, so that's your parents, your pregnant women, the median state is seeing about 32% growth in enrollment.
So really steep enrollment. At the same time, state budgets are being squeezed. So therein lies a key problem and a key factor facing the landscape in the Medicaid program going forward. So what are the key questions for states that bring us back to the federal level? Will there be additional congressional action on state and local relief?
We still don't know whether the lame duck Congress is going to come to some agreement on COVID stimulus package. But what seems pretty clear is even if a package emerges in the next day or 2, that state and local relief is not is likely not going to be in that package. And so that remains a big question for January. I think everybody expects even if there is a package now, there'll be potentially another package or certainly the Biden folks will want to push hard for another package in January. And state and local fiscal relief will be really important and really important to the outlook for Medicaid.
And then of course, big questions around what will happen to enrollment and revenues over the long term. So going beyond the basic budget picture, as noted, expansion moved ahead over the last couple of years, Medicaid expansion. So let's see where we are right now. Just to give you a point of reference, in 2020 in 2014, which is when the ACA coverage provisions kicked in, became effective, we have about half the states, a little less than half the states that had that were taking up the Medicaid expansion at that point. We now have 38 states have expanded plus the District of Columbia.
And that comes on the heels of successful ballot initiatives in probably states that wouldn't necessarily be top of mind as to where you'd expect a Medicaid expansion. But it's very popular whenever it hits the vote and the ballot box. So ballot initiatives were successful in Nebraska, Idaho and Oklahoma. Oklahoma being the state that's still the expansion doesn't kick in until 2021, but the other states have already actually started enrolling people. So is it reasonable, given what I just said about budgets, to think about states moving forward in the year ahead?
Well, on one hand, they have to come up with 10% of the share of expansion. But on the other hand, hospitals have largely been open to financing that portion of the state expansion through higher provider payment rates and provider taxes, I'm sorry. So the expectation is it doesn't necessarily have to come out of the state general funds and expansion brings an influx of federal dollars, an immediate influx of federal dollars. And so it's a mixed bag in terms of the budget situation and an area where we think there's likely to be some continued consideration of expansion. Now the Biden administration is going to be very focused on closing that coverage gap.
The candidate Biden had proposed a public option to be established at the federal level. That was partly a marketplace proposal, but it was partly a coverage close the coverage gap proposal. His proposal was that in the states that hadn't expanded, if there's a public option on the marketplace that the people in that coverage gap could enroll. I think it's pretty unlikely we're going to get a public option passed through Congress regardless of what happens in the Georgia election. But that just I think that means that the Biden administration will focus a lot on coverage expansion, but will do so through its administrative tools.
And they are substantial. They're not infinite, but they are substantial. So the big question will be what is the Biden administration willing to do through waivers. He's going to do clearly very different approaches on waivers, Medicaid waivers than the Trump administration. But it gives the Biden administration has a number of ways to use a combination of carrots and sticks around mostly around dollars to be able to interest states into moving along on expansion and to close the coverage gap.
So I think we'll see a lot of changes in labor policy and much of it aimed at how do we make it even more attractive for states the remaining states to come and expand. Finally, let me touch upon where we're going on managed care at this in the Medicaid program at the state and federal level, increasing heavy and ever growing reliance on managed care. You see it in all over the country, even though we have a high penetration, about 38 states rely on comprehensive managed care. We continue to see states join that group as well as states that already rely heavily on managed care doing some expansions within their managed care framework. For example, we see California, a heavily managed care state.
They are creating state only managed care opportunities, state funded for the undocumented. But also they're moving in, in their regular Medi Cal program, long term services and supports into managed care. Oklahoma, in the face of doing the expansion in 2021, the governor there has proposed to implement managed care. It's one of the smaller number of states that haven't done any managed care. They've issued the RFP and that's moving forward in Oklahoma.
We also have seen a number of reprocurements and including some big states, Michigan, California, states that haven't done reprocurements in a while. So what are the states looking for when they're expanding managed care, when they're doing reprocurements? I think areas very much aligned with Centene's strengths and priorities. They're looking for better integration, behavioral health with physical health and also bringing in long term services and supports to integrate with both behavioral and physical health. They're increasingly looking at social drivers of health, housing, food and security, violence, interpersonal violence, issues that can really bring up health care costs and interfere with positive health outcomes.
So there was a growing focus on managed care in 2019. We did a review of all of the managed care contracts and what they required of managed care plans on social determinants. So it is not a fad anymore. It is definitely part of the Medicaid delivery system landscape, but we've seen, if anything, more focused during COVID because of obviously the dislocations and the hardships that so many families have faced. We're also seeing states focus on particularly vulnerable populations, justice involved people, people being released from jail, for example, foster care kids and high cost, high needs individuals with also a vantage point on social drivers of health.
We've also seen a pretty quiet I say quiet because there's so much going on in this world, it's sort of not been front and center growth of drug overdoses. CDC just released a report that showed a 12 month increase in drug overdose in the year ending March 2020 I'm sorry, May 2020, with the largest increase starting in March through May coinciding with the pandemic. So what might the Biden administration do? I think they're going to support more investments into managed care. They're going to support more investments into social determinants, which will give states some more dollars to actually spend on this and not just make requirements for plans, but really expect plans to get involved and deliver on the interventions themselves.
A lot of states have been pent up demand for these justice involved waivers to help them get into jails before release. I think the Biden administration will approve those. There's a lot of states interested in doing more on pregnant women and reducing the health disparities there. And I think also likely, we'll see new initiative on dual eligibles. So bottom line for me to wrap up.
From the state's perspective, Medicaid has really been moving steadily forward in terms of reliance on managed Care, while also state governments have been expecting more of their Managed Care partners. COVID has interrupted a lot of the regular business, but it's also accelerated trends in key areas around social drivers of health, around the focus on high needs, high cost populations and continued growth in the scope of managed care in states. We have re procurements coming up in several large states. So we'll see enrollment continue to grow for some time, though difficult to predict. At the federal level, we're looking for the Biden administration to reverse course on the kind of waivers that the Trump administration has approved, to do what they think they can do to boost expansion.
There's an opportunity to do so and to focus on some of these priorities, social determinants, behavioral health, specialty populations and health equity.
Thank you so much, Cindy. Really appreciate it. Next, we will go to Andy. And I know we do have quite a few questions in the queue. So Andy, hopefully closing out, if you stay as close to 5 minutes because we definitely want to make sure that the questions from the folks get out because they're really looking forward to hearing from you all.
So next to you, Andy.
Thank you. Thanks, John. And I'll try to be quicker. The I want to thank Michael. I just have to do it to start with this.
It was a few years back when I was in the Obama administration. One day I picked up the phone and called up Michael. We had a this is a time when the ACA was just moving from not profitable to profitable. Michael picked up the phone and I said, Michael, we have a market that is desperately in need of someone to provide service and beneficiaries. Michael said, you can count on Centene.
If people need help, we're there. We'll work on the details. And there are two points to that story. One is that I think and I think Haley said this, the best partner wins, people who understand government, people who are going to be supportive of government, not everybody does that. The second thing is it turned out to be an immensely smart decision for Centene because it was just as the market was turning, it won a lot of market share.
And I think it showed me that the character that shows through in companies that know how to partner with the government and understand that the government has challenges and the government cannot solve these challenges without good partners we'll succeed. It's hard I'll go quickly just to give you maybe a little bit of insight at the federal level and what's going on inside the Biden camp. Biden has stated 4 priorities for this term: recovering from COVID, the economy, racial justice and climate. What didn't you hear there? You didn't hear health care.
And for the first time in 3 presidencies, we have somebody who is not making major health care transformation a part of his goals. I don't care if he had 58 votes in the Senate. Healthcare can suck the option out of the 1st 2 years of any administration, and Joe Biden has decided that's not where he's going to spend his chips in Congress. He ran on that. This is not different than the Joe Biden ran on being a unifier.
He did not run on creating difficult lightning rod issues, which it's been for the last 2 presidents. So even if the Democrats were to win in Georgia, fifty-fifty is a very tough way to govern in the Senate anyway because every senator becomes the most powerful person in the country in their own minds. So you it's very hard to get things substantial done. Not that there won't be potential for incremental things that are tagged on to other bills. So Cindy is exactly right.
You'll see most of the work that comes out of Washington will come from the agencies. And so you look at those four priorities, and among those four priorities, you hear some things that aren't exactly health care but touch on health care. Probably the thing that's to focus on the most is COVID right now. I think it's just like in 2,008 when the presidency was hinged at the beginning on turning around the financial recovery, which tanked at the end of the Bush years. The entire Biden presidency will live or die by how well and how quickly he can get the COVID response turned around.
We are, in January, probably going to be at a point where 5000 to 6000 or more people per day are dying in a single day. Most of the models and I don't know whether to believe them or not because I'm not a professional at this, but most of the models say that we are about only halfway to the number of deaths that will suffer in this country even under a scenario where the vaccine rolls out next year. So I think you'll see him do a bunch of things differently from the current President, including working the bully pulpit pretty heavily, trying to get support for people out of Congress, working on getting people back to school through testing very aggressively, making people feel safe and a bunch of the operational levers that Trump just decided not to pull very aggressively. It's going to be a challenge and he won't get there unless he can get people to pull together and I don't know how he does that, but he's putting a lot of great people on this because I think he knows how important it is. One of the other things that I mentioned was racial justice.
Why is that important? It's important because not only do I think social determinants of health are important, but I think very explicitly every policy will be looked at from a standpoint of how does it affect people of color, people in rural America, people who are of low incomes, seniors, less fortunate people, but very explicitly race. And I think that has not been that's always been kind of in the background as we've talked about social determinants of health, but it's not been as explicit as I think it will be. I think you will have senior people in the White House and in the agencies who are focused on this. One of the things that I tell people who come into office is the White House has their priorities.
Whatever is in the White House priority, that's yours and the agency. Generally speaking, that's yours. And by yours, it's the Health Secretary, it's the Head of CMS, it's the Head of CMMI, it's the Head of OMB, it's the Head of the Domestic Policy Council. Those people will get to determine most of the things that impact your world. Now there's a few things we know, which is that they believe that the people who are the target Centene customer and member are getting a raw deal.
And so I think that is a net good thing. What we know is that they need partners like Centene to be able to be successful. We know that Centene has people like Kevin Coonahan, who knows how this works inside the government, inside and out, and knows how to partner with government. So I think there is what does all this spell? If I sum up, it spells stability.
We're not going to have the kind of crazy big changes. It spells growth because we're going to have growth from all of these programs, Medicare, Medicaid and the ACA. And it spells an opportunity to partner. And I think that's an opportunity for the next few years that if we can make progress, I think we'll be welcomed by the country.
Thank you so much, Andy. And we will go to our first question, and it's to Andy. And that's what do you see a President Biden doing in those first 100 days to potentially strengthen the ACA?
Well, I think so Javier Becerra, who is the new Health Secretary, someone who I got to know pretty well when I was in Washington, is deeply familiar with the ACA. He was part of passing it, but he's also someone who is familiar with the ins and outs of how people qualify for coverage, how people how some of the regulations work along the lines of special enrollment periods and all of these kinds of details. So I suspect that the easy thing will be that they will look at the things that the Trump administration did to hinder growth or to make the market more confusing and get rid of those. There will also be people involved in the government, including Kevin's former deputy, who is going to have a big role in whatever happens at the ACA, whether she runs the SCIO, whether she runs DPC, whether she's a PAD, and who's very close to Kevin, her name is Kristen Link Young. She's going to be one of the key decision makers over the next few years.
And as Kevin could tell all of you, she knows every word of that inside and out. So I think you're going to see hundreds of little things that are maybe too even small for people to even know about that are all going to advantage people who haven't been aware of, haven't seen the subsidies, haven't had the opportunities. And I think you're going to see them be fairly creative in that regard. I think they want to make the ACA a mainstay of how people grow their coverage.
Next, we've got to Jen with the question.
Hi, everyone. Thanks for joining us. We do have some questions from the audience. The first one comes from Matt Borsch at BMO Capital. How do you think the Biden administration will differ in terms of regulatory approach to Medicare, specifically Medicare Advantage?
So do you want to start or you want me to start?
Go for it, Annie.
I think we're about to so he meant it hasn't been a while since we've talked. I think it's going to be there are some rules coming out. There are some things coming out from the Trump administration before they leave that are pretty major models that are fairly aggressive in Medicare. And the first test of the Biden administration will be to see what they finalize and what they don't. And I don't think that could be known yet because I don't think we know who's sitting in the CMS chair.
We don't know who's going to be sitting in the CMMI chair and in the Head of Medicare chair. We know some of the people who are around for those roles. I expect more continuity than not. I mean, we're used to seeing a lot of very public differences around things like repeal in the place of the ACA. When you get underneath that, there's pretty broad agreement on many of these things.
Medicare Advantage is here to stay. There's no question about that. There is some question about whether Medicare Part D and Part B get some reforms on the pricing side. And I think that will happen eventually. Whether it happens now or not, hard to know.
I don't think, given Chuck Schumer's support and many others in Congress, I don't think there's a scenario under which Medicare Advantage gets beat up too badly. And then I'll go finally to Cindy Mann's point. People are realizing that health care that health is more than just about health care benefits. And so people are trying to find ways to be creative and allow the program to meet other needs that people have. And I think that's good for society and it's good for Centene.
So the one thing I would I think that's all right. One thing I would just quickly add is there are going to be some big questions in Medicare about what they do around telehealth. So the Medicaid underlying statute allows the blossoming of telehealth that just happened. It didn't rely on COVID specific new flexibilities, that's what pushed states to move forward. But Medicare, it's some of the changes are going to require potential statutory changes, regulatory changes.
So it's a deeper infrastructure change to keep telehealth strong post pandemic. So that will be a big question.
Next question, Jen.
Yes, great. With that, we'll go on to our next question. It comes from Josh Raskin at Nephron Research. And we touched on some of this, but maybe specifically through the CMS lens. What do you think Biden is looking for in the next head of CMS?
And what would you expect to be the major areas of focus?
Well, thanks, Josh. Obviously, good looks has always been a prerequisite for that job and that won't change. I would tell you that they're not making that role as early a priority as they are as they obviously did CDC and as they will with FDA because they don't view it as critical to the things they have to do today. Obviously, the things that they are that they have to do payment policy, I think they'll be on top of nursing home regulations, they'll be on top of. I think the thing about the Democratic side is, and I don't know whether Haley would agree with this or not, but there's just more people that you can walk I can't walk 5 feet and that run into someone who could be CMS administrator in Washington from the Democratic side.
There's just so many health policy people there. The I just without there
are a few
of the finalist candidates, all of whom I think would be terrific. And so I don't think that the choice will be somebody who brings a major agenda. I suspect it will be someone who brings a real love for those programs and the ability to administer those programs and
The other thing I would add with that is with the Trump administration, the one thing that governors talked about was the great access process, they're going to be looking for somebody that does have those strong relationships with the states because that's going to be critical in terms of the coverage opportunities.
Yes, I think that's right. And it's always been this balance of do you have that expertise in the administrator? Do you rely the Medicaid agency to bring that traditionally? CMS administrator has been very Medicare focused. That was not necessarily the case in the Trump administration where the administrator was very Medicaid focused.
But I think Andy is right. They're looking for somebody who can run it well, cares a lot about the programs. I think the 2 things that I'll also be interested right off the bat is can they be effective in helping on the COVID response? Everything for the at least for the short term is going to be COVID, COVID, COVID. And then secondly, going back to one of Andy's points too in mind, which is they are really focused on the racial equity issues.
So I think thinking about whether it's a person of color who runs it or somebody who's going to be very sensitive to and attentive to the issues of disparities will be high on their list.
One small thing I touched, Cindy, made me think of, policy for people with disabilities. I think you pick some groups that have been long ignored. And while this won't be a shift to the left, I think Governor Barber's got that exactly right, There will be groups of people that have been long ignored because their democratic constituencies, people with disabilities, transgender community, people of color, what have you, you can imagine there. And I think those will be very be very high priorities, and I think you'll see. So if Centene has innovative and creative solutions for, say, providing long term care, disability community, etcetera,
Great. In the interest of time, I think this may be our last one. We want to be mindful of everyone's schedules. But this final question from the audience comes from A. J.
Rice of Credit Suisse. It's a broader question. Do the panelists think that at any point attention turns back in Congress toward reducing or containing the federal deficit? If they do focus on the deficit, what kind of impact would this have on health care policy?
Well, let me say this. The Medicare Trust Fund, which is different from the deficit, but I think it's the same general way you're going, A. J, is that you have right now the Medicare trust fund to become insolvent in 2024. I would say that's part of the work of the Trump administration was, I think, quite honestly, neglect in that regard and in large part because I think they would have liked to see the ability to reform it in the second term by doing something more significant. That's going to be an issue.
I mean, there's you can't avoid if you have the Medicare trust fund expiring in your term, you're going to have to do something, whether they can do something without Congress or whether they need Congress will be interesting. Look, I think the broader question around the deficit is it's a very interesting it's going to be a very interesting debate because you have a lot of people whose message out of the pandemic is going to be, wow, we've got a lot to fix, whether it's schools, whether it's state government, city government, investment in public health, a list of mile long. And then you got other people who will say, gosh, we spent a whole bunch of money during this pandemic. How are we going to catch up and make it up? And we've got historically low interest rates, but this isn't an economic question.
It's a political question. It's a belief in what do you think the role of government is type of question. And as I think Governor Breber said exactly right, we got a split, and we got a split with very little ability to compromise in the Congress. So I think this is going to be one of the potentially interesting debates. Should we come out of this, how quickly will we be moving on and how quickly will we or how quickly we try to address some of the wrongs, I think that's going to be a big fight between both parties on a policy basis.
If I could just make this one point. I believe that we are not going to see politician really ready to step up to the plate and try to make meaningful reductions. And when I say reductions, I mean real reductions in our federal debt until the world's quits buying our debt. I mean, is right now the average American thinks this isn't a problem. I mean, we can sell all the bonds that you can imagine and people all over the world will one day and I don't know what day, what year, what decade, one day the world is going to wake up and say, we're not going to take the America's debt anymore.
We're not going to buy their bonds because they're too deep in debt and they're not doing anything about it. I don't know when that will happen, whether Republicans or Democrats, but both of them got plenty of volume on their hands.
And Governor Barber, when you look at the states and heck, you were in the middle of recession when you look to go into managed care. So you all have to balance those budgets at the state level. So what would you expect from governors as we're dealing with recession kind of like how you dealt with it?
Well, of course, the different federal programs take pressure off of the what it takes to balance your state budget because you're getting money from the federal government to take the place of state funds. But it is if the federal government had to balance its budget, it would be a very different country. And there are a lot of people who think that might be for the better.
Right. Well, thank you all very much. Really appreciate the informative discussion. And next, we'd like to go to closing, our Chairman and CEO, Michael Neidorff.
Before we so used awareness get taken off sometimes. Before we adjourn, I would like to take a moment to summarize what you've heard today. But I also want to thank the team that put this together. I want to thank the production people that dealt with the multiple locations. It was just phenomenal.
It was a real team effort to make this happen. We heard before this is what the second or third virtual meeting we've been doing. We virtually are getting used to it, but we don't want to get too used to it. We can't wait to get back face to face. In summarizing what you've heard today, simply put, the underlying business of Centene remains strong and you can be assured that we will stay the true to our principles.
2020 has been a remarkable year during which we have remained focused on several key priorities and some of these things you've heard before. 1st, the safety and wellness of our employees. 2nd, ensuring uninterrupted access to care for a very vulnerable population that we serve. Excuse me, some swallow worms. 3rd, protecting our providers by removing administrative burdens related to COVID-nineteen treatment and testing.
And 4th, support our state partners through challenging times and strengthening our already well established partnerships. And lastly, and very importantly, ensuring our results meet shareholders' expectations. And most importantly, that you are in a position to be proud to be a shareholder of this responsible company. The meeting today was intended to provide additional exposure to our senior and most senior staff. Unfortunately, not everyone can join us today because of social distancing and how many people in the rooms and other restrictions.
But I look forward to having our full team participate in the future. But I don't want I want you to know that they are as vital as important. We have people such as Jesse Hunter, our Chief Strategy Officer Randy Burkholder, Chief Operating Officer Marcella Hahn, our Chief Communications Officer Chris Costa, General Counsel Ken Yamaguchi, Chief Medical Officer Susan Codis, our Vice President and Chief of Staff Matt Snyder, Chief Compliance Officer, among others. All are important members of our team, I look forward to all of us being together next time for future Investor Days. I intend to showcase them, so you really get to know.
I hope our conversation today gave you a sense of our day to day activities, our opportunities for growth and the breadth and depth of our technology I don't think I am overstating it when I say we have the strongest, most capable technology group that you will find on any team. We are united in our desire to delight our members and providers And moving forward, you can expect to hear more about how we are improving quality and simplifying the healthcare delivery process for all our stakeholders. Turning briefly to the marketplace for what I expect will be the last time. I know there is likely some disappointment in the results, but I would like to emphasize what you've heard before. First, we are not participating in a price related race to the bottom and we'll continue to take a long term sustainable approach to pricing as we always have.
2nd, we will not provide a limited network that encourages out of service network utilization and can lead to surprise billing and other problems. Thirdly, we will not compromise our quality of service for our members, providers and state partners. We will continue to say that true to our principles and maintain our overall strategy, which has been successful and will continue to be successful. In closing, I want to share something I've been thinking about recently. I've been thinking about what makes a truly great and well respected symphony orchestra.
In that caliber of organization, every musician has the capabilities to be a soloist, but they come together to produce a quality product of beautiful music. At Centene, we are a symphony comprised of remarkable people with the talent to be socialist, but who are united by a mission and work in concert to meet the needs of all our publics. With that, I'm going to close by wishing you all a most blessed holiday season and that you be safe and healthy throughout. We look forward to seeing you in the New Year. Thank you.