But that is one of those things we’ll certainly want to watch next year. How that develops relative to our expectations, recognizing there may be some behavior change that we see within the provider community, they adapt to those changes. So that’s something we’ll continue to watch but it’s something we anticipated and included in our ’24 pricing.
Operator: Our next question will come from the line of Lance Wilkes with Bernstein.
Lance Wilkes: Yes. hopefully, you’re going to hear me here, operator, cut out on me too. Just a quick question. You made a comment about modestly higher attrition you’re expecting in ’24. I was wondering if you could maybe just give a little more color on the drivers of that, if it has to do with distribution channels or maybe the greater proportion of nonduals or something like that? And then also, if you could just remind us for the $37 target in ’25, what’s the kind of implicit a rate increase that you’re expecting that we ought to be starting to see in February that’s kind of baked into that?
Bruce Broussard: Okay. I’ll take the first one and Susan can second one. On the modestly higher attrition really is just coming from what we — our history of when there are changes, significant changes in benefits, what we do see is people shopping more. And in result, when they’re shopping more, though, we’ve seen increased attrition. So it’s really more the environment we’re in as opposed to dramatic changes in our distribution channel or our benefits.
Susan Diamond: Yes. And Lisa, as respect to the $37, I would say, in general, as we’ve commented, we have been anticipating that the rate environment would not continue to be as favorable as we’ve seen in the last number of years. obviously, for 2024, the industry is absorbing the more negative rate environment. And with the phase-in of the risk adjustment model changes, we anticipate that, that will be implemented over the next — the remaining over the next two years. That will certainly have an impact to our primary care business which we’ve talked about. While the business has a mitigation plan and they believe they can fully mitigate the impact, they do think it will take time. So we are anticipating a headwind in ’24. That will be somewhat lessened in ’25 as they continue to mature and scale some of their mitigation plan initiatives and then fully offset by ’26.
Within the health plan, I would say, we obviously know what the impact of the risk adjustment model change phasing will be but we’ll have to obviously see what the core adjustment looks like in light of some of these higher trend, in theory, you would see some positive restatement embedded in there. So we’ll have to see what that looks like and whether it’s sufficient to cover normal horse trend. The way we generally think about it though is that is we go to impact the industry broadly. And so in theory, we should be on par with everyone else and assuming everyone react rationally, then it wouldn’t put you in an advantage or disadvantage. We are very pleased, though, again, have the really strong Stars results that were published recently. And that, again, is a durable advantage for us where we do know some others will have some challenges to deal with there while others may have some improvement.
And so those are all things that we consider as we plan for ’25. I just reiterate, we remain committed to delivering the $37 committing to continue to grow at or above the industry rate for MA membership growth. and wanted to highlight recognizing it requires an accelerated growth rate for earnings in ’25. I wanted to make sure we highlighted some of those more unique tailwinds that we will benefit from in ’25 that allow us to achieve that higher than typical rate in order to deliver to $37. And we’ll certainly share more on our fourth quarter call.
Operator: Our next question will come from the line of Nathan Rich with Goldman Sachs.
Nathan Rich: Can you hear me?
Susan Diamond: Yes.
Nathan Rich: Great. Susan, maybe just building off of that last comment there on the 2025 target. How should we think about the margin progression for the Medicare Advantage business between ’24 and ’25. Seems like maybe a bit of a bigger step up than what you had anticipated previously. And you also made reference to some additional earnings levers like pricing actions. Could you just go into a little bit more detail on what you’re considering there?
Susan Diamond: Yes, absolutely. And so as I called out in my prepared remarks, there are some tailwinds that will benefit from in ’25. As we said, the outsized membership growth and the progression you will typically see in the margin profile of those new member cohorts improves over time. The higher agents, in particular, as I mentioned, they typically don’t see the real up in performance until year 3 when they fully convert to risk adjustment. So the member — the new agents we’ve got in our 2023 book, we’ll then see disproportionate improvement in 2025 that will help contribute to that higher earnings growth that would be required to get to the 37. We have continued to see favorable net investment income, as you’ve seen in our results.
And so some of those things are improving relative to what we would have thought going into ’24 and we’ll continue to ’25. And then certainly, our continued focus on productivity is something that has continued to prove to be a mitigant for the near-term pressure. And then we expect to continue to see more than the 20 basis points of operating leverage that we committed to. And then some of the capital deployment will benefit as well. So the way I think about it, when you try to isolate some of those things, sort of then what’s left is what you say is more normal progression within our historical targeted range. We do acknowledge that given what we’re seeing in the trends and also in some of the discrete utilization we’ve seen in some of the benefits we’ve discussed we do expect that we will take some discrete pricing action for ’25, we’ll certainly be targeted in the way we do that, so that we’re addressing some of those spots that are driving less earnings progression than we would have expected at the time of pricing.
And so while they might have some impact to membership, we would say we would plan to target in a way where that’s okay but it’s the appropriate thing to do to balance the membership and the earnings progression that we’d be looking for. And you still feel confident that more broadly, we should be well positioned such that we should be able to continue to generate membership growth at or above the industry rate.
Operator: Last question will come from the line of Mayo with Leerink Partners.
Benjamin Mayo: Did you say Whit Mayo?
Susan Diamond: Yes. [Indiscernible].
Benjamin Mayo: That’s a consistent theme today. Just one clarification just on that last topic of the agents. Can you quantify, Susan, the growth that you’re seeing this year [indiscernible] the 19% growth and what you’re thinking for next year? And then I’m just wondering where you are on sort of the evolution of the delegation of risk one home, how much of the medical spend you’ve transitioned in maybe how much of that is driving the growth on your Home Solutions assist.
Susan Diamond: Okay. I got the first one. Would you mind repeating the second question? So the first question was about agents. What was the second question?
