Sam Beckeron

Sam Becker, on behalf of Scott Fidel, asked if Alignment Healthcare is concerned about a potential loss of bipartisan support for the Medicare Advantage (MA) industry in Washington and what actions the industry can take to improve its standing and alleviate ongoing regulatory pressures.

Answer

Founder and CEO John Kao stated that the MA industry should realign with CMS's original intent: delivering value to beneficiaries through high quality, better experience, and affordability. He believes that financial engineering tactics, such as over-coding, global capitation, and prior authorizations, are unsustainable. Mr. Kao expressed confidence that MA will continue to grow due to its superior benefit differential compared to traditional Medicare, citing its historical resilience through various policy changes.

Sam Becker inquired about concerns regarding the MA industry's bipartisan support in Washington and what actions the industry could take to improve its standing and alleviate regulatory pressures.

Answer

CEO John Kao stressed the importance of the MA industry returning to CMS's original intent: delivering high-quality, affordable care that provides value to beneficiaries. He suggested minimizing 'financial engineering' and highlighted MA's historical resilience through various policy changes, expecting continued growth due to its benefit differential over traditional Medicare.

Sam Becker asked for an update on Universal Health Services' overall assessment of healthcare policy risks, specifically concerning Medicaid work requirements and potential funding cuts.

Answer

Steve Filton, Executive Vice President and Chief Financial Officer, stated that quantifying the impact of Medicaid work requirements for 2027 is difficult due to unknown specific state requirements and the likelihood that affected individuals may be lower utilizers of the system. He noted that no hospital companies have precisely quantified this impact yet, and more clarity is expected as the year progresses.

Sam Becker asked for an update on the company's overall assessment of healthcare policy risk, specifically regarding Medicaid work requirements and potential funding cuts.

Answer

CFO Steve Filton stated that quantifying the impact of Medicaid work requirements, set to begin in 2027, is difficult due to unknown specific state requirements and the likelihood that those removed from rolls may be lower utilizers. He expects the picture to clarify later in the year, noting that no hospital companies have yet precisely quantified this impact.

Sam Beckeron asked about Oscar Health's key levers for achieving EBITDA profitability without enhanced subsidies and the main headwinds or tailwinds impacting MLR and SG&A from 2025 to 2026.

Answer

Mark Bertolini, Oscar Health Chief Executive Officer, identified key levers as growth (driving down percentage of costs), AI (improving member experience, stickiness, efficiency, accuracy, and reducing wait times), and continuous work on contracts and utilization management to control medical trends. R. Scott Blackley, Oscar Health Chief Financial Officer, clarified that the company's guidance is on EBIT, with adjusted EBITDA expected to be $115 million higher than earnings from operations.