Lisa Gill: Thanks very much and good morning. I want to focus on margin drivers. Can you maybe just spend a little time talking about the progression in 2024, getting to those targets that you have in 2025? And then secondly, when I think about the margins in CarelonRx, you talked about them improving by 40 to 60 basis points. Can you talk about what the drivers are there as well? Is that Paragon Health and BioPlus, which I would assume carry better margins? Or is there something else that’s really driving that improvement as we move into 2024?
Mark Kaye: Lisa, thank you very much for the question. I’ll talk about health benefits, and I’ll pass it over to Pete in a couple of minutes to talk about Carelon. On the health benefits side, we are seeing operating margins expand, or expect to expand by 25 to 50 basis points in 2024. And I think about this has really being driven by three primary categories. First is the continued underwriting discipline and the pricing actions that we’re taking in commercial. 2023 really marks the end of the first full year of our efforts to recover margins from the pandemic era lows, and we expect those supporting initiatives really to continue through 2024, and then possibly into 2025. Second one, I’d call your attention to here really relates to the Medicare margin expansion.
And here, as you’ve heard us talk about, this is about building that strong foundation for sustainable long-term growth in 2024. And striking that balance between growth and margin. And in 2024, we leaned a little bit more towards the margin and the growth and you see that come through in some of our outlook projections this morning. And then the third one, I’d call your attention to, is really the operating expense leverage, you see that we are gaining additional incremental leverage in 2024 with our guide down to 11.1% for the operating expense ratio.
Peter Haytaian: Thanks Mark. And Lisa, your question was on the trajectory of the margins in pharmacy. So, you’ll recall that this year, in 2023, we made pretty significant investments as it relates to the acceleration of BioPlus and Advanced Home Delivery, and that puts some pressure on our margins in 2023. That will not repeat itself in 2024. We did go live with BioPlus on January 1 as well as with respect to Advanced Home Delivery. We’re really excited about that, and it’s moving in the right direction. And over time, we’ve built those products for scale. And as that business builds and progresses, we will continue to see margin improvement. So that is, what is – delivering an improvement in margin in 2024.
Gail Boudreaux: Next question please?
Operator: Next, we’ll go to the line of Scott Fidel from Stephens. Please go ahead.
Scott Fidel: Hi thanks. Good morning. I was hoping you could – just on the commercial risk enrollment guidance, if you can break that down for us, between group and individual? And then on the individual piece, I’m curious in terms of what you’re thinking in terms of how much of that growth comes from the catchers – from Medicaid. And then, how you’re thinking about the acuity of those lives that are coming into the exchanges from Medicaid. We know that in Medicaid, that acuity is generally rising as the re-determinations continue. So I’m curious, though, in terms of those lives that are transitioning into the exchanges – are you thinking about those as being sort of higher, lower, or in line acuity with the legacy population in the exchange market? Thanks a lot.
Gail Boudreaux: Well, thanks for the question, Scott. I think we’ve got about four or five in there. So, we’ll try to hit the high points of your question. Let me ask Morgan and then Mark to comment on your question. Morgan?
Morgan Kendrick: Yes, Scott, thanks for the question. As we think about the ACA business, we’ve talked about it for a while now. We’re quite bullish on that segment. And as we’ve remarked in other quarterly reports, we operate in all rating areas in our 14 geographies where we can. And certainly, we’ve seen an expansion in the actual market share, and the market growth actually in these geographies. In fact, it’s certainly a big driver is Medicaid re-determination. As we’ve indicated earlier on the call today, we’ve concluded about two-thirds of those. We expect that to continue in 2024. And also, as we’ve noted in the past, we’ve seen an elongated period of time from when someone is re-determined and when they actually join Medicare or come on an ACA product moving along.
That said, quite pleased that our growth this year is outpacing our market growth. So clearly, we’re picking up our fair share and more, quite honestly, of the Medicaid re-determined members. So at the end of the day, this will continue. We’ve had a very steadfast and steady approach around the right economics, and the right network strategies, to draw in these members. It’s very important for the business to continue. And I’m going to turn that over to Mark to speak a little bit about the margins and the separation of the various pieces that you asked the question on.
