Elevance Health faces mix of hurdles

For Elevance Health and other big insurers, 2024 devolved into something of an annus horribilis over the year’s final weeks. And 2025 holds more challenges but also an opportunity for a rebound.

Indianapolis-based Elevance faces a precarious task—meet or exceed Wall Street expectations in an environment in which critics cite growing profit as evidence of the need to reform health insurance.

In Indiana—where Elevance’s Anthem Blue Cross and Blue Shield is the dominant commercial health insurer—the rising cost of health care is a key issue in the Indiana General Assembly.

“We need to find a way to increase competition in the insurance space,” Rep. Cindy Ledbetter, R-Newburg, said during a hearing this month on a bill targeting high hospital prices.

Multiple bills target health and pharmacy benefits reform, including Senate Bill 480, which would limit the practice of pre-authorization, through which an insurance plan has to provide approval before paying for a service or medicine. Senate Bill 3 would require that employee benefit consultants—who help employers design their health benefits for workers—have a “fiduciary duty” to act solely in the employer’s best interest.

Also, Gov. Mike Braun last month issued an executive order calling on “state agencies to prioritize tackling surprise billing, pharmacy benefit managers, and high drug prices to make health care more affordable for Hoosiers.”

That political backdrop coincides with other challenges.

Late last year, Elevance endured a public relations crisis when the company’s Anthem unit went viral on social media over a proposed reimbursement change for anesthesiology in three states.

What’s more, investors have punished health insurers in recent months, with Elevance faring significantly worse than some of its biggest rivals.

“We weren’t perfect in 2024, and Elevance Health (ELV) -22% was our worst performer,” Canada-based GreensKeeper Asset Management wrote in a note to investors.

Reimbursement rates for Elevance subsidiaries that provide Medicaid and Medicare Advantage coverage are crucial to Elevance’s earnings. Elevance’s profitability has been hurt by policyholder losses in its Medicaid business and higher medical costs among its remaining policyholders.

Elevance shares have lost nearly 30% of their value in the past six months. Over that same time, the S&P 500 gained about 13%.

After that drop, many analysts see an opportunity.

Thirteen of 24 analysts tracked by The Wall Street Journal rate Elevance as a buy, and four more rate the company as overweight, meaning they believe the stock will outperform a benchmark index or its peers. None has a “sell” rating.

GreensKeeper expressed confidence in Elevance headed into 2025. “ELV has proven it can adapt to changing government regimes,” the research note said, “and we believe it will continue to do so with the incoming Trump administration.”

Rising anger

The U.S. health care system is expensive and complex. In 2023, health care expenditures—a $14,570 per-person average—accounted for 17.6% of gross domestic product, according to the Person-KFF Health System Tracker.

And Elevance is massive.

The company has more than 100,000 employees, and its affiliated health plans cover more than 45 million people. Elevance’s Anthem Blue Cross and Blue Shield operates health plans in 14 states, including Indiana.

It netted nearly $6 billion in profits on revenue of $177 billion in 2024, and it ranked 40th on last year’s Fortune Global 500 list of the world’s largest companies in terms of revenue, one spot behind General Motors.

“We’re dealing with financial behemoths,” said Dr. Donald Arnold, president of the American Society of Anesthesiologists. “They continue to report, year-over-year, quarter-over-quarter, revenue and profit increases at a point in time the dissatisfaction with coverage, the dissatisfaction with the administrative burden that physician groups and hospitals and health systems face is greater than it ever has been.”

In a statement provided to IBJ, Elevance said its focus remains on serving the needs of each individual and creating partnerships within its communities to solve health care challenges. In 2025, the company said, it will continue using data-driven insights to simplify health care.

Yet Elevance is subject to pressures far beyond Wall Street.

The Dec. 4 killing of UnitedHealthcare CEO Brian Thompson unleashed a torrent of online anger at the health insurance industry.

According to a survey that month of 1,001 people from NORC at the University of Chicago, 69% of respondents said denials for care and 67% said profits made by health insurance companies had a great deal or moderate amount of responsibility for the killing of Thompson.

Suspect Luigi Mangione has pleaded not guilty to both federal and New York charges of murder and stalking in the case.

The media and social media attention that followed Thompson’s death intensified focus on the Anthem anesthesia proposal.

The proposed policy change last year for Anthem in Connecticut, New York and Missouri would not have reimbursed for anesthesia care if procedures went beyond a certain time limit.

In November, the American Society of Anesthesiologists called the planned policy change an “unprecedented move,” saying Anthem would be pre-determining the time allowed for anesthesia care during a surgery or procedure. The group said anesthesiologists provide individualized care to patients and must attend to unexpected situations that might extend procedures.

“Outrageous. I’m going to make sure New Yorkers are protected,” New York Gov. Kathy Hochul wrote in a Dec. 4 post on X about the Anthem proposal.

The next day, Anthem changed course.

In its statement reversing the policy, Elevance’s Anthem unit cited “significant widespread misinformation” about the proposed anesthesia policy but also said “it is evident that our communication regarding this policy was not clear.”

Backing down on the policy change might have quelled the onslaught of criticism but also sends mixed messages to the public, said Mansur Khamitov, assistant professor of marketing at the Indiana University Kelley School of Business.

“You’re trying to fix or solve the issue, but at the same time, customers, or broader stakeholders, also find it inauthentic,” he said.

Instead, Khamitov said, companies in crisis need to be careful, strategic and proactive in their communications.

Moving forward

Elevance appears to be proactive in 2025. During a January earnings call with analysts, CEO Gail Boudreaux made extended opening remarks about her company’s vital role in health care.

She did not mention the homicide of UnitedHealthcare’s Thompson or Anthem’s reversal of a planned anesthesiology policy change.

First, she spoke of the devastation of recent wildfires in California, where Elevance has 9 million customers and 6,000 employees.

“This moment underscores our shared humanity, reminding us that, above all, we are a community dedicated to supporting people’s health and well-being,” Boudreaux said. “Our purpose as a company of improving the health of humanity remains resolute. … For our members, we play a critical role in ensuring simple, affordable and accessible care.”

In her remarks, she acknowledged problems within U.S. health care with “rising costs, administrative complexity and disparities in access to care.” She also emphasized the work Elevance is doing to try to streamline health care by working closer with hospitals and physicians.

“In cases where we have aligned data sharing with the health system, we have nearly eliminated claims denied due to incorrect or incomplete information, significantly easing the administrative burden for these systems,” she said.

This month, the Elevance Foundation committed $150 million over five years for health initiatives in underserved communities. It was the foundation’s largest commitment in its 25-year history.

Elevance also pointed to patient stories highlighted on Elevance.com as examples of its value in health care.

The company said Chavon Haley is a young mother who is homeless, blind and has diabetes and kidney disease. She was seeking care in the emergency room regularly. Elevance said one of its health plan nurses worked with Haley for more than two years, helping her attend doctors’ and dialysis appointments and find stable housing.

Another Elevance policyholder, Debbie Lessenberry, used the company’s Member Connect program that seeks to reduce loneliness by pairing Elevance employee volunteers with older adults who live alone and are managing health conditions.

“Their stories are emblematic of the Whole Health approach that is an important differentiator for Elevance Health,” Elevance spokeswoman Leslie Porras said in the written statement.

But the American Society of Anesthesiologists’ Arnold still sees a much different picture.

“The health insurance industry has, at large, broken trust with patients, broken trust with employers, broken trust with physician groups and with hospitals and health systems,” he said, “and they have an important obligation and a responsibility to rebuild that trust.”

Arnold said his group plans to keep the pressure on health insurers in 2025. And Wall Street is always watching, too.•