Gail Boudreaux: Thank you, Mark, and thanks, Kevin, for the question. Next, question please.
Operator: Next, we’ll go to the line of Josh Raskin from Nephron Research. Please go ahead.
Josh Raskin: Hi. Thanks. Good morning. I was wondering if you could speak a little bit more specifically around the growth in Medicare Advantage to start this year. It sounds like a little bit lower than expectations. And I’m curious specifically in the commentary you made around pockets of competition, maybe where you’re seeing that, what you think is driving that? And then any specific comments on retention relative to expectations for this year.
Gail Boudreaux: Well, thanks, Josh, very much for the question. And just maybe a couple of overarching comments because I think it’s important that I’m going ask Felicia Norwood who leads our government business to comment more specifically. And I think it’s important to frame that we made some very specific discipline decisions and feel really good about our bids entering into this. And Felicia, we actually exited some markets very specifically that were underperforming. So I think you have to take that into account. But she’ll just provide a lot more detail on kind of where we landed this year and the perspective on the market. So Felicia, please.
Felicia Norwood: Sure. Good morning, Josh, and thank you very much for that question. As we headed into 2024, we made some very disciplined decisions that we were going to enhance the financial performance for our Medicaid Advantage business. You know, in the mainland, we exited as Gail noted specifically certain markets that had been underperforming for us for years. And with the impending risk model revisions, we really saw no path to long-term attractive, sustainable economics in those markets. And that really represented a decline of about 84,000 members. I also want to note that, we reduced supplemental benefits in Puerto Rico, both to turn around their performance after a very challenging 2023 and to position us for the 3-year phase-in of the risk model revisions, which will have a material adverse impact on Medicare Advantage on the island, in part due to the higher mix of duals that we have in Puerto Rico.
So, we’ve reset our supplemental benefits there, and in the midst of a very highly competitive bid environment, we will see membership declines of somewhere in the neighborhood of about 90,000 in 2024 in Puerto Rico. Now, while the decline is larger than we expected, it certainly has bolstered our confidence in the anticipated improvement in our benefit expense ratio in Puerto Rico. At the end of the day, what we wanted to do was to establish a very strong foundation from which we can grow in Puerto Rico long-term, sustainably, and profitably. Back to the mainland. Selling activity for AEP was actually very strong for us, as we expected. When we exclude the planned attrition on the island that we mentioned – on the mainland that I mentioned earlier.
Our net mainland Medicare Advantage membership would be on track to grow by high single-digits this year, despite encountering greater dis-enrollment in certain markets, due to very aggressive offerings by select competitors. At the end of the day, I think that we’ve made very thoughtful decisions around how we’re going to position our business for long-term sustainable growth going forward. And we’ve done the things that we’ve always committed to do. We expect to do very well in our Blue markets. We are performing better in our Blue markets than the overall growth rates, and we’re very much focused on a combination of balancing that perspective between margin, and membership growth. So, we feel good about how we’re positioning our business going forward.
And as we said earlier, in light of all of these dynamics, we’d expect to have flat membership in 2024.
Gail Boudreaux: Thank you. Next question please?
Operator: Next, we’ll go to the line of Sarah James from Cancer Fitzgerald. Please go ahead.
Sarah James: Thank you. Do you guys have some really nice margin expansion guided to for Carelon in 2024? I was wondering if you could unpack it a little bit for us, as we think through the major buckets that are causing the expansion. And then also the pacing, if it’s ratable as we think about the margin expansion due 2024 and then I guess, further out as we get to 2027?
Gail Boudreaux: Thank you, Sarah. I’m going to ask Pete Haytaian, who leads Carelon to comment on that. And as you know, we’re excited about the real flywheel opportunity that we’re seeing in Carelon. So, Pete?
Peter Haytaian: Yes. Let me – thank you, Sarah, for the question. Let me talk about Carelon Services growth. And we are very excited about the opportunity and the progress that we’re making with respect to services growth. I think you saw that play through in 2023. We committed to double-digit increase on revenue, which we achieved. And as it relates to our 2024 guide, you saw that we’re talking about high teens, low 20s growth. And it’s really playing through our strategy that we talked about focusing in on complexities in healthcare, high-cost spend areas, and really driving capitated risk in key areas, to support our health plans. In 2023, we did that with our post-acute care initiative, DME, wound care. And as we move forward into 2024, I mean Gail mentioned this in the prepared remarks.
