You can't hear it on the mic, so okay. All right. Yeah, hi, everyone. Good morning. Steve Baxter, healthcare services analyst here. We're pleased to have Centene with us. Centene is the largest provider of government-sponsored health coverage, with a focus on Medicaid and the exchanges. From the company, we have CEO Sarah London, CFO Drew Asher. Thanks again for being here. Did you guys wanna make any opening remarks, or should we just go right into the questions?
Yeah, I thought we'd kind of give a quick update on the business.
Yeah, great.
and then go wherever you want to.
Yeah, of course.
... in terms of questions.
Yeah.
So at a high level, I think Q3 so far is evolving thematically very similar to what you heard from us throughout Q2. We are still on track for our adjusted EPS full year of greater than $6.80. We are still seeing pressure in Medicaid, largely driven by the unprecedented redeterminations process that we're now almost 18 months into, and that continues to be offset by strong performance in our Marketplace business, as well as in SG&A and investment income. And then, across the business, we continue to make good progress. Recent results from an RFP standpoint, Medicaid growth, we saw a positive result in Pennsylvania, defending our LTSS business there last week, and then we got results out of Iowa yesterday.
We reprocured our business in that state as well, and that is all part of, I think, great momentum that the local teams and the business development team have put on the board in 2024 . In addition to strong performance in Marketplace for 2024, we feel really good about our pricing strategy for 2025 , a continued focus on margin in that business. Also pleased with the fact that CMS recently adopted the Agent of Record lock, which is something that our Ambetter team actually pioneered earlier this year, and we believe will create a more stable purchasing experience for the Marketplace membership. From a Medicare standpoint, the teams did a really good job anticipating direct subsidies and benchmarks for both PDP and Medicare Advantage, and we are on track for our 2025 bids in both of those businesses.
One illustrative example, we ended up being below the benchmark for auto-assigned in 33 out of 34 regions, and so able to continue to offer attractive low-premium products, aided by the CMS demo, which we decided to opt into. One important thing to note on PDP, partly because of the IRA changes and then final rate notice provisions, at the time that we filed bids, we made the difficult decision to eliminate broker commissions this year for PDP only. We have not made any changes. We'll continue to pay full commissions in Medicare Advantage and obviously work very closely with the broker community, to support the work they do to support our members. And then, lastly, Stars. So we got CAHPS results, which is sort of that final chapter that we are waiting for over the last couple of weeks.
Those came in line with expectations and improvement year- over- year, which is again consistent with what we saw across most chapters for Stars this year, so working on an internal range, because CAHPS points don't come out for another couple of weeks, but continue to feel very good about that range and demonstrating meaningful progress in our ultimate Stars goal for October of 2025 , so with that, maybe I'll turn it over to Drew, just to give a little bit more on the underlying dynamics for back half.
So drilling a little bit deeper into... We've got one month closed. Month of July is closed. We've got preliminary data on August. We don't close August till day 6, which is next week. But as Sarah said, thematically similar to what you heard us say on Q2, though we still are continuing to get Medicaid pressure. Largely, once again, similar to what we said on the Q2 call, largely driven by redeterminations. And so you might ask, "All right, what's changed in the last month and a half?" Membership continues to attrit slightly, so we think we're gonna level off around 13.0 , maybe 12.9 million members. And recall back at Investor Day, we thought we'd level off around 13.2 million members and then grow back to 13.6 by year-end.
We think we're gonna settle out around 13.0 million members, and you guys understand the dynamic between stayers versus leavers. That does put pressure on the Medicaid HBR. In addition, continued theme around rejoiners, where you have a lot of administrative terminations, about 30% still are making their way back to us, but that time period where there's a gap in coverage does continue to sort of widen a little bit. And that's a time period where we're not getting premium, and then obviously, the member is finding their way back into the Medicaid healthcare system, typically because they've got an event they wanna get covered, or they have a script to fill. So that's putting pressure on the Medicaid HBR in the quarter. In addition, so that's largely the biggest driver.
We've also talked about program changes in states, where either it's a new program or the state did something wonky with the pharmacy benefit, whether they carved it out to a single PBM or maybe they added GLP-1s. And so there's program changes we've got to get paid for as well. So that, you know, that continues to be a pressure point. And then third, we're always looking for pockets of trend, and we're isolating continuous members. And so what we're seeing there is similar to what we've said, really, for the last year and a half, pockets of behavioral health in a post-pandemic environment, a little bit of home health. So all of that said, we expect the Q3 Medicaid HBR actually to be a little bit higher than the Q2, Medicaid HBR. On the flip side-...
Sarah said, the benefit of having a diversified enterprise, where Medicaid is just under 60% of our revenue stream, continued strong performance in Marketplace. We expect that to continue into Q4. Things that we can control more, like SG&A, I think the company's done a good job with SG&A this year. There's always more opportunity ahead, and then investment income continues to be strong. So you put all that together in a diversified enterprise, that enables us to reaffirm our greater than $6.80 goal for this year. Then one more thing, real quick. Understandably, it's difficult with redeterminations and the sell side trying to predict perfectly the quarterly flows within that greater than $6.80.
If you look at consensus for Q3, we would take $0.20-$0.30 out of Q3 and put it into Q4, just to slope out the timing of when we expect to earn in the back half of the year. So I thought that would be a useful update, and hopefully, we didn't take away from all of your good questions.
I think we just threw the questions out the window. Come back to some of the discussion here. Okay, so then, you know, just to make sure that we fully understand, you know, the contrast. Like, it seems like before this update and maybe some of the trends on membership and maybe the July, you know, sort of closed month that you have, you would have been expecting MLR to improve in the back half of the year as a result of, you know, the rate updates that you are getting in your second half states.
When we think about, you know, what's changing here, like, do you still think that at least for the states where you're getting rate updates, like, do you think economics there continue to improve, or do you think this is enough that the rate updates that you're seeing in the back half of the year now are not producing a level of margin improvement, even specifically for those contracts?
Yeah, so the rate updates, so we still believe the back half of this year, where we have most visibility, we've got one draft rate left for our 10/1 rates that we're working on with the state, but we're still at 4% +, so that hasn't changed to your point. Some of the 7/1 rates. I mean, and we need more than the 4% +. So that was-
Yeah.
We never thought that, that would be the panacea and the solution to get us back to where the long-term, you know, the long-term landing spot for Medicaid. So we continue to have healthy discussions with the states, productive. We just need to get through a few more rate cycles with... We've got a 9/1, a strong 9/1 rate coming-
Mm-hmm.
That'll help Q4 more than Q3. We're working on our 10/1 rate with another large state, and then another bite at the apple 1/1, 4/1, and then 7/1 to 10/1 next year as well. As we continue to share data, especially the emerging rejoiners data, which continues to sort of mature and develop, sharing that with our state partners.
Okay, so at this point, you know, you'd still characterize the issues as being related to largely acuity and membership, either, you know, loss or rejoining versus underlying pockets utilization. Like, when you study this, I think you called out behavioral as something that you're watching. When you look at same store utilization on the stayers, like, what do you feel like you're seeing there as you continue to study the data?
Yeah, we can. I've talked about this before. We can isolate. We got all the data. We got the stayers, the leavers, the rejoiners, the new joiners, but then we can isolate not just, you know, within the stayers, members that have been continuous members for the last 2- years, and then really isolate what trend dynamics are within that population. And, you know, just like we've noted for the last year and a half, two years, pockets of behavioral health pressure, sometimes that's when the state decides, "Hey, we're gonna increase access," or they tell the payers, "You're no longer allowed to do prior auth," and then we just, we need to get paid for that.
And so there are states where we're lobbying the state and explaining with data outside of redeterminations, you know, where they've a few states have put GLP-1s in for the weight loss indication. That's sort of normal course work with the Medicaid agencies. But yeah, it's this is largely driven by redeterminations.
Okay, and then, you know, obviously, this is an unprecedented thing the industry has gone through, redeterminations, with the number of people that are involved in the process and how big of an impact it's having on your business. As, I guess, as you step back now and look at where we sit, and obviously, it's played out quite differently across a number of aspects, how do you feel in terms of the conservatism that you're now implying in the back half outlook here? Do you feel, still think there's opportunities of risk here, or do you think you've now set the back half conservatively enough that there's more likely that things develop positively for you versus negatively?
Yeah, I mean, I think if you look at, to your point, we're now 18- months into this, and I think state by state, you know, it's played out a little bit differently. I think on the whole, we actually did a pretty good job of estimating kind of where membership was gonna land. The 30% rejoiner dynamic is not something I think anybody could have anticipated fully, partly because some of that was driven through system issues at the state level. And then this idea that the rejoiner dynamic, which is effectively sort of a churn dynamic that Drew described, where you've got folks who we're not getting premium for, right, who are still eligible for the program.
So that's something that we're working with the states, as part of advocacy, to say, "You know, this should be included in an acuity adjustment, because it's sort of a programmatic issue for these folks who were eligible and were not." And then I think as we look to the back half, you know, for us, in general, trying to be conservative in our estimates, and also, you know, where we are front-footed, full-throated in advocacy, but also looking at where there are levers internally that we can pull, in order to offset and, you know, just manage the business through what is an unprecedented time. So, you know, doing everything we can. I've met with half of our governors in the last four weeks.
And then again, internally saying, where there are decisions that we can make to make sure that we've got stability in the program as we work through those rate changes?
... Okay. And then as you think about how this impacts, you know, potentially the trajectory that you set out for, you know, 2025 , I think you made some comments on the last quarter's call. Do you still expect to be able to grow Adjusted EPS? I guess, on one hand, you know, just because Medicaid is dropping lower, doesn't mean it couldn't be back in the same place theoretically in 2025 as you initially expected it to be. But how do you think about, you know, things like, hey, the exchanges seem like they're taking another step higher in terms of performance this year? I guess, like, how would you, you know, maybe reframe the commentary on 2025 that you made on the last earnings call in light of what you're talking about today?
Yeah, I think we'd have a similar view. Now, obviously, the jump off matters, but view of trying to and feeling like there's a path to grow Adjusted EPS in 2025, we'll see that as it develops through the year. We'll give guidance, anticipate giving more formal guidance at our December Investor Day, but that's certainly the goal, and we think as we sit here today, at least, that's achievable. How much is gonna be the question.
Okay. So then when we think about, you know, kind of the rate updates and, you know, the, the timing to getting some of this more recent, you know, trends factored into it, I guess, when you say, like, "Hey, there needs to be a lag in data before states view it as credible," like, how are you thinking about the rate updates that you'll get in the early part of next year, like January 1 rates? Like, do you think they are reflective of the emerging trends that we're seeing? Do you think they'll be enough data at that point? I guess, how do we think about the timing lag to get in these unforeseen issues factored into rates?
I think by the time... So if you think about the 1/1 rate cycle, even just, even just the cycles that we're in now, I would say, well, let me go all the way back, right?
Yeah.
We started a year before redeterminations began, having these conversations state by state with actuarial counterparts and running scenarios, and then we've continued to layer in data as it has developed over the last 18- months, which helped the fact that starting July 1 last year, we got prospective rate adjustments, right, so we, Drew, you know, Drew's walked through that framework of acknowledging, acting, and then are the rates sufficient, so every state has acknowledged this is an issue. All but one has acted, and the one that hasn't, has committed to acting, so they're just working on the adjustment, and then the question is sufficiency, so starting July 1 last year, all the way through the cycle, we have had states make adjustments.
I think right now, our conversations, again, continue to be productive and include the most recent data that was coming out of Q2, so if you think about the 1/1 rate adjustments, we're gonna have that much more data to demonstrate completion factors and sort of what the underlying experience is, and so that should all help in terms of the runway and the advocacy to make another, you know, sufficiency adjustment in that 1/1 cycle.
And the level of urgency for all of our peers, not just public peers...
Yeah
But like the note you put out or the book you put out, about the industry, there's a lot of not-for-profit Medicaid players that are really hurting. So the fortitude at which we collectively approach the states has, I'd say, improved in the last two to three quarters. And so the noise level is high, and the states are listening. We just need that last step, like the sufficiency, as Sarah noted, like the cycle of convincing them with data, that they've got to recalibrate the rates. And they're doing that to some degree, obviously, not-
Yeah
... quick enough and fast enough for us to contain that pressure on the HBR. But we expect to improve Q4 and beyond as we get those rates in. There's levers we can pull.
Mm-hmm.
We can get tougher in certain areas, and we will, controlling medical costs, but this is largely getting the states to act when the Association of Health Plans goes to them as a collective group and makes those arguments.
Okay. Yeah, so it makes sense that it's choppy in the near term. If we go out a little further on the calendar, like, does the fact that you're seeing more pressure now impact where you think you would be, say, January 1, 2026 ? Like, do you think that's the same place? Because that's a pretty big amount of time between now and then. I guess, how are we thinking about, like, is there now more time required to get to more normalized margins as a result of the starting point being worse or not?
That will have to play itself out in 2025. I mean, obviously, for 1/1 2026, we'll have two bites at the 1/1 apple.
Mm-hmm.
If 1/1's not sufficient enough, then we've got another one for 1/1 2026. We'll really have to get the 4/1 2025 and then the 7/1 to 10/1 2025 right in order to sort of hit that ultimate glide path, which we don't think has really shifted in terms of the ultimate landing spot, getting back to our target HBR, which, you know, rounds up to right around 90%. We think that's achievable. It's just difficult to perfectly predict which quarter we're gonna hit that and then stay there thereafter.
I think that's consistent with what our view was even sort of at this time last year, which is that those changes may annualize into 2026, because it sometimes takes, you know, multiple bites, especially across 31 states, right, in the tail.
In terms of, you know, kind of the, to pivot to the offsets a little bit, like exchange performance, my understanding of it was coming out of, you know, the second quarter, exchange performance was good and improving year on year. But wasn't something that you thought about as a level of margin that might need to, you know, moderate going into 2025 ? Like, given the outperformance that you've seen since, I know that we're, you know, pretty much like now past the window for pricing for 2025 , but how are you thinking about the sustainability of exchange performance this year into next year?
As we called out on the Q2 call, you know, we had the $600 million benefit, going back to the 2023 risk adjustment year-
Yeah
in 2024 , so sort of setting that aside. Feel good about the strength in that business, the momentum. You know, the competition has been pretty healthy. I mean, we don't mind competing against our large peers that generally are responsible and thoughtful with their pricing. Maybe not perfect, but generally responsible with their pricing position. And in fact, many of them are likely trying to protect a margin stream on a, you know, small group business. So I think the underwriting thought of that goes into their approach for the Marketplace. So I want to see where, you know, where we exit with the HBRs of all of our businesses, but feel pretty good about the strength of the Marketplace business, the execution of the team.
As Sarah said in her opening remarks, as we, you know, learn things about, you know, through the broker community or through other means about the positioning of our peers, we feel good about what we know today about how our benefits and our products will be sitting in 2025 .
Okay. So you don't think maintaining or, you know, coming close to maintaining this year's performance requires you to, you know, be at risk of market share based on what you know today? I guess, like, your competitive dynamics is early, but do you feel like there's something specific that you're trying to call out?
I mean, I think the team has demonstrated the ability to, you know, grow margin and frankly, grow market share over the last 3- years pretty consistently, so, and we've talked about this before, but they take a very rigorous county-by-county approach and think about sort of how to balance across the portfolio. Strategically, the focus for next year continues to be on preserving margin, and again, we don't have, you know, the full view yet, but from early intel, feel good that how the team executing is that strategy.
Okay. And then in terms of, you know, I think you mentioned SG&A, I think that was a notable outperformance in the second quarter there. It continues, it looks like, to perform, you know, quite well. Like, where are the savings on the SG&A front coming from?
Certainly, the growth in revenue, you know, we added $5 billion of revenue to our guidance last quarter. So we can manage the SG&A for that incremental revenue, but then just continued automation and, quite frankly, getting some really good people on the bus, and that can execute well.
Yeah, I mean, we're in year three of the Senior Equity Research Analyst, Value Creation Plan. We sort of stopped, you know, using that as the framework, but it's very much front and center in the mentality within the organization. Lots of initiatives that started over the last 2- years that are starting to really ramp, you know, everything from streamlining procurement, again, making sure that we've got the best talent, which means you can have fewer, better people doing things. Automation processes are getting more streamlined, more consistent. So those are all the things that we've basically been working on for the last 2- years are really starting to build momentum. I don't think we're done there.
I actually am excited about, sort of the foundation we've created that the team is going to be building on, but I think some of it is just the discipline of, you know, what we've started to put in place in terms of operational execution across the business.
In terms of, you mentioned there's Medicaid improvement opportunities that go beyond just, you know, kind of waiting for the rates to come to you. Can you talk a little about what those are? I mean, one thing we've noticed as we've analyzed the data is that the level of, you know, payback to states that you guys have seen in your portfolio seems to trail some of the other larger organizations in the space, which would seem to suggest that you have an opportunity to maybe rise to their level of performance in some aspects. Like, how do you guys think about the opportunities to improve the base business X rates?
Yeah, there's a number of pockets. We spend a lot of time with our businesses, our health plans, ripping through opportunities and sharing best practices across our 30 states. And so whether it's, call it network sculpting in behavioral health, especially. In fact, there's one state that effectively opened up the floodgates for new behavioral health providers-
Yeah
in the name of access, which is great, but there's some cost containment that has to be employed. So, you know, having the right network, there's some dials that we can turn in home health, you know, managing the hours of private duty nursing, sort of some blocking and tackling opportunities. Always persist in the managed care business because, you know, it's very rare that you're humming on all cylinders across the entire portfolio. So, there's areas that we can do better, and we will, in the management of cost, as we get the right revenue to match. Where there's been program changes, a couple of states that went to a single PBM, and maybe they're sucking rebates off into the general fund. And so, you know, getting the right rates commensurate with some of those programmatic changes.
But you're right, pulling, you know, managed care, doing our job, pulling managed care levers in the meantime is another opportunity.
Okay. To come back to the, you know, you mentioned the Part D changes kind of at the top. The company's had, you know, kind of a bit of a shift in strategy. I mean, you've, you've grown a lot, and now you're in a position where, you've mentioned the, the commission changes you're making, you know, effective for 2025 . I guess, what impact do you think this is going to have, both in terms of the membership that you guys see, the financial profile of that membership, and just any comments you'd make just regards to, like, whether there's been any change in your view of underwriting for that business as you've moved through this year and had a chance to examine that more?
It certainly got a lot tougher with the IRA changes, and so, you know, I think we were collectively a little bit nervous about picking the direct subsidy. I mean, going from... like $2 or $3 in 2023 to $29 in 2024, to now $143 and change in 2025, getting that, those estimates close, and quite frankly, helping to move the market to-
Mm-hmm.
-make those estimations and think about some of the programs related to the IRA that are complex, that are built into Part D, and the PDP business. So, yeah, pleased, as Sarah said, very pleased with how the team navigated and estimated the direct subsidies. The benchmark positioning, we're 33 out of 34, under the benchmark for auto assign, so that was a win, preserving, that part of our, our PDP business. We'll have low premium products. I mean, we took the, you know, like I assume everyone did, but took the demo, which creates an opportunity to have low premium products in most of our regions. So feel pretty good about that. But yeah, it's very complex, and quite frankly, we set our bids to the rules that were promulgated in the final rate notice, including the rules around broker commissions, for PDP.
And by the time a Texas judge issued a stay, we couldn't change our bids. So, you know, thinking about all those changes that the government made on the PDP program related to the Inflation Reduction Act, and then adapting to those, feel pretty good about our PDP positioning. And obviously, there'll be quite a bit of revenue increase because of what the payers are stepping into-
Yeah.
in terms of the risk assumption, going from 20% to 60% of the catastrophic phase.
Okay, yeah. And just to come back to, like, what it means for 2025, I know when you were listing headwinds and tailwinds in the second quarter call, one of the things you listed was PDP, but I think specifically PDP revenue. I guess, what does that mean in terms of the incremental dollars that you're now underwriting? I guess, how do you think about them in your 2025 initial thought process? And I guess, longer term, how do you guys think about, like, what a reasonable margin is on the incremental risk for PDP? What's the right margin for PDP over a multi-year horizon?
I think stepping into the IRA, there were changes in 2024, but the large changes came for 2025. There was reason for caution. I think we did, once again, a good job constructing the bids around the rules that were promulgated at the time. I think of 2025 as a low margin positive, but low margin.
Mm-hmm.
-but a big increase in revenue because we're adding pharmacy expense, and we're adding premium revenue in our bids.
Yeah.
So mathematically, the HBR will go up. We think it'll be a low single-digit margin. And then over time, to your point, that's a much larger revenue stream. We'll have to push that margin into a more target range, which would, you know, be higher than a low single-digit margin.
Okay, and now, you know, as you probably have a better sense of, you know, your actions that you're taking in Medicare Advantage for 2025, give us any updates on how you guys are thinking about, you know, membership, markets, plans that you might be exiting and, you know, potentially how to think about, you know, where you think membership could shake out at this early stage?
Yeah, so again, we talked about this on the Q2 call, but feel very good about how the team approached the 2025 bids. Again, we don't have the landscape files, but have some intel. Our strategy was really to continue to focus the book aligned with the more complex members, you know, leveraging kind of the synergy with our local presence, our Medicaid expertise, and we knew that that, you know, would likely lead to membership shrinking. We also made the decision to exit a handful of states where we didn't have a scale or strategically was not aligned with sort of where we wanted to go in terms of that Medicare-Medicaid alignment, which actually was part of also kind of this broader look at Stars being the biggest lever-
Mm-hmm.
-to getting to profitability in general in the Medicare book, roughly sort of two-thirds. How could we reduce complexity and therefore, you know, focus our efforts and get a greater lift on what we are doing from a quality standpoint across the book? And so reducing... You know, I think at one point, we had close to 100 H contracts.
Okay.
We took out a number of those as part of the reduction of the book, as part of the state exit, and all of that is just administrative simplicity, concentrating membership, making sure, again, those quality efforts sort of create return and bang for the buck, and so as we said, I think, you know, the expectation is, without seeing everything yet, that we would shrink membership, yeah, as part of the path to a sustainable, profitable business that aligns really nicely with a market-leading Medicaid footprint.
In terms of just thinking about, you know, the progression of shrinking the losses to eventually get into that profitability position, like, what's the latest thinking on the amount of progress you can make, you know, shrinking the book and shrinking losses before seeing, like, a real material improvement in Star Ratings?
Yeah, again, Stars is the biggest lever. There are others like SG&A and just in general, thinking about sort of performance of the book overall. And so what we're trying to balance is, you know, we'll have a meaningful step towards our ultimate goal of 85% of members at three and a half Stars or more by October of 2025, which is then 2027 revenue.
Right.
Without knowing sort of how the rates are gonna shake out, that's sort of the zone we're trying to figure out through sort of the biggest lever of continuing to drive sustainable quality improvement, and then making sure that the book that we have, which is scaled now and certainly really beautifully scaled for managing more complex members, that that's really what we wanna be kind of getting to profitability and growing against.
... And obviously, we'll, you know, have a lot of focus on the elections coming up, you know, in a couple of months. As you guys look at the exchange business, obviously, the growth there has been, you know, phenomenal for you. The enhanced subsidies seem like they've been an incredibly important driver of that. As you guys step back and think about, you know, the range of outcomes there and, you know, the membership side, specifically, if we were to see enhanced subsidies not be extended, any updated thinking on how you think that could impact, you know, industry membership levels? And then to the extent that there is any kind of membership drawdown, what's the right way to think about, you know, the incremental margin performance of that? Do you think that's a book average, and you can manage to that?
Do you think there's fixed costs you're leveraging too? I guess, any updated thoughts on how you're thinking about exchange sensitivity to the election?
Yeah, I mean, again, we don't see it as sort of a binary issue-
Yeah.
- and we see a lot of support, bipartisan support, particularly given... And if you just look at the numbers, the number of, recipients of the enhanced subsidies that are in rural communities-
Mm-hmm.
that are in red states, there is an overwhelming constituency there that I think, it would be hard to abandon. That said, you know, there are also really interesting levers that you can pull relative to product design. You can think about, and this is sort of the work that the team's, you know, already been doing, is thinking about how you leverage state-based exchanges as well. So there are all these different layers of how this becomes, even in a world where the enhanced subsidies were somehow not extended at all, where it's not, you know, what CMS said, which is sort of roughly mid-20s% of the market.
That, I think, is sort of a black and white, not thinking about where the incentive would be for states that have all of these recipients and voters to leverage state exchanges, state dollars, federal matches, to think differently about something that's feeding small businesses in their community, that's really supporting members in a fundamentally different way. So, that all of that is work that we're doing, you know, to prepare. But again, also the conversations we're having from an advocacy standpoint suggest that, you know, it, it's more around something like capping at 400%, sort of adjusting the program.
and there's increasing awareness that the enhanced subsidies have stabilized that platform, and that the possibility of ICHRA for small businesses, which again is sort of very consistent with the Republican policy foundation, is a pretty compelling platform for them. So to your question, though, I think one of the things that we would think hard about is making a product adjustments, leveraging some of these other alternatives, to maintain that book in its target margin range, and sort of leaning that way over membership. But we've got plan B, C, D, and E out there-
Yeah.
- that we're working on in parallel.
Okay. And then just, yeah, maybe a quick question, and last one on the exchanges, would just be on the ICHRA side. I guess, you know, as you continue to invest in that business, how are you guys thinking about, you know, the growth opportunity for the next couple of years? I guess, what do you feel like you're seeing, to the extent you're monitoring the market this year, in terms of adoption, you know, for next year? Any kind of read on how the growth in that market continues?
I mean, the market, the market continues to grow robustly. Now, again, it's a small denominator, so. But there's a lot of active dialogue. There's a lot of interest. If you talk to some of the big brokers, you know, a lot of people are asking about this, partly because if you think about, you know, the pressures that are out there, you know, employers trying to figure out whether they're gonna cover GLP-1s. I mean, every CEO I talk to is like-
Yeah
... "Wait, you're an insurance company? What should we do about GLP-1s?
Yeah.
Right. So the cost pressure that's out there, everything you're seeing in terms of states approving, you know, small business premiums, like, there's just a lot of pressure out there. Our view is that it's a market that's going to grow bottom up, not unlike the way Marketplace adopted, sort of Medicaid up, and it's really about the fact that it's a beautiful solution for small businesses.
Mm-hmm.
And some of these rural communities, the ability to offer health insurance as a benefit in a sustainable way for the first time. And so that's where we see the adoption happening, which again is sort of beautifully aligned with the fact that we have, you know, boots on the ground, local approach. We know those small business owners, and that it'll still be just sort of a, you know, a watch and wait over the next year or two to see how quickly the market develops. But you know, I think again, it's sort of aligned with our ethos in terms of sort of bottom-up growth.
Awesome. I think we're out of time. Thanks for the discussion today. I really appreciate you coming to the conference.