John E. Gallina
Executive Vice President and Chief Financial Officer at Elevance Health
Thank you, Gail, and good morning to everyone on the line. As Gail stated, we are pleased to have delivered solid fourth quarter financial results closing out another year of strong growth, driven by the continued execution of our long-term strategy, all while navigating the ongoing uncertainties associated with the pandemic.
Fourth quarter earnings per share of $5.14 was ahead of our expectations and drove full year adjusted earnings per share to $25.98, reflecting growth of approximately 16% year-over-year above our long-term 12% to 15% annual earnings per share growth target. Total operating revenue for the fourth quarter was $36 billion, an increase of more than 14% over the prior year quarter, reflecting solid growth in our benefits business coupled with continued momentum in our services businesses. We closed the year with 45.4 million members, growth of nearly 6% or 2.4 million members in the year, including 303,000 lives added just during the fourth quarter, and with growth in both our Government and Commercial businesses. This was the 14th consecutive quarter in which we grew total medical membership underscoring the strength and resilience of our core benefits businesses through periods of economic strength and periods of economic uncertainty.
In 2021, we grew our Government membership over 17%, driven by organic growth in Medicaid, another year of double-digit organic growth in Medicare Advantage and the acquisition of MMM. Commercial enrollment grew modestly as solid growth in our risk-based areas were partially offset by in-group attrition in our fee-based business due to a broader labor market dynamics that occurred during the year.
Our fourth quarter benefit expense ratio was 89.5%, an increase of 60 basis points over the prior year quarter, driven by the repeal of the health insurance tax in 2021. As expected, total medical cost in the quarter were above normal or baseline levels, but still compared favorably to our expectations, driven by lower utilization of non-COVID care, partially offset by higher than expected COVID-related cost notably in December.
Anthem's SG&A ratio in the fourth quarter was 11.7% on a GAAP basis, a decrease of 200 basis points over the prior year quarter. Excluding adjustment items noted in our press release, our adjusted SG&A ratio would have been 11.1%, down approximately 250 basis points year-over-year. The decrease was driven by the repeal of the health insurer [Phonetic] tax and the expense leverage associated with strong growth in operating revenue, partially offset by increased investments to support our growth and digital transformation efforts afforded by outperformance in our investment income.
Fourth quarter operating cash flow was $1.7 billion, bringing full year 2021 operating cash flow to $8.4 billion or 1.4 times net income. Our fourth quarter and full year cash generation beat our expectations, reflecting strong operating performance this year, as well as a shift in the timing of the planned payment of our share of the Blue Cross and Blue Shield Association litigation settlement. We now expect to make this payment of approximately $500 million in 2022, which is included in the guidance we provided this morning for operating cash flow of greater than $6.9 billion.
We ended 2021 with a debt to capital ratio of 38.9% in line with our expectations and well within our targeted range. Consistent with our approach throughout the pandemic, we maintained a prudent posture with respect to reserves. Days in claims payable ended the year at 45.2 days, an increase of 1.8 days year-over-year with medical claims payable up 19% year-over-year compared to premium revenue increasing by 13%.
During the quarter, we repurchased 1.3 million shares of our stock at a weighted average price of $417.92. For the year, we repurchased 5.1 million shares for $1.9 billion, ahead of our original guidance of $1.6 billion. We were opportunistic in the year capitalizing on periods of market volatility, notably, during the fourth quarter.
Turning to our outlook for 2022. We are pleased to provide initial guidance, including adjusted earnings per share of greater than $28.25, which reflects growth of at least 12% from the normalized adjusted earnings per share baseline of $25.20 in 2021. As a reminder, we benefited from significant investment income outperformance during the year, including amounts that we believe to be non-recurring. We offset a portion of the upside in the fourth quarter by accelerating investments in our business. In total, for the year, we believe, nearly $0.80 of our adjusted earnings per share to be outside of our run rate. Accordingly, we continue to view $25.20 as the appropriate starting point for our growth in 2022.
We expect to end 2022 with total medical membership in the range of 45.6 million to 46.2 million members. This outlook includes the expectation of generating double-digit organic growth in our individual Medicare Advantage business and the launch of our Group Medicare Advantage contract serving the retirees of the City of New York in April which will add at least 200,000 Group Medicare Advantage lives, while shifting a like number of members out of our Commercial fee-based enrollment, given that we currently serve the City's retirees on a self-insured basis. In all, Medicare Advantage membership is expected to grow in the mid-teens percentage range.
Our outlook also reflects strong growth in our Commercial risk and fee-based businesses, including a strong starting point due to a record selling season for national accounts. We expect Commercial fee-based membership to grow by 2% to 3% or 530,000 to 730,000 members net after covering the transition of our more than 200,000 existing fee-based members in New York into our new Group Medicare Advantage contract, and low single-digit growth in our Commercial risk-based members.
With respect to Medicaid, our guidance assumes the public health emergency will end in mid-April as is currently planned with Medicaid eligibility redeterminations resuming around the middle of the year. Correspondingly, we expect to capture our commensurate share of growth in Commercial fee and risk-based markets as consumers losing Medicaid benefits migrate to employer-sponsored coverage and individual plans. As you might expect, our membership outlook for our Commercial and Medicaid business is highly dependent on the timing and pace of Medicaid eligibility redeterminations. The launch of our new statewide Medicaid contract serving Ohio in July is also contemplated in our guidance range, while membership associated with pending acquisitions is not.
We expect continued momentum in our Diversified Business Group and IngenioRx segments with revenue growth on a combined basis in the low-to-mid teens. Altogether, the momentum we are seeing across all of our businesses will drive operating revenue up 11% year-over-year to approximately $152 billion. This includes approximately $130 billion of premium revenue, also up 11% over 2021, representing an increase of nearly $13 billion.
The consolidated benefit expense ratio is expected to be 88% plus or minus 50 basis points in 2022, consistent with our initial outlook for 2021. At the midpoint, this reflects a 50 basis point increase year-over-year, driven primarily by the launch of our New York Group Medicare Advantage contract. With respect to the impacts of COVID on our overall cost structure, we anticipate another year in which the overall cost of care will track above normalized levels driven by COVID-related treatment, vaccination and testing costs.
We expect the SG&A expense ratio to be 10.8% plus or minus 50 basis points in 2022, reflecting a reduction of 60 basis points at the midpoint of the range relative to our adjusted SG&A ratio in 2021. The reduction is primarily driven by operating expense leverage due to strong growth in revenue in addition to the benefits of our ongoing modernization efforts, including workflow automation and digitization. This is partially offset by continued investment in our initiatives that will drive future growth in operating efficiencies, including digital engagement and system migrations.
We expect our operating gain for the year to be greater than $8.4 billion, reflecting growth of at least 8% year-over-year over adjusted operating earnings in 2021. Below the line, investment income is expected to be approximately $1.1 billion and interest expense is expected to be approximately $840 million.
Our effective income tax rate for the year is expected to be in the range of 22% to 24%, consistent with 2021. Full year operating cash is expected to be greater than $6.9 billion, which includes the anticipated payment of our share of the BCBSA litigation settlement, which as I noted earlier, is approximately $500 million.
From a capital deployment perspective, our long-term targets remain unchanged and we will continue to pursue programmatic M&A in an effort to enhance the organic growth of our existing operations and diversify and extend our capabilities, moving us closer to our goal of becoming a lifetime trusted partner in health.
While our guidance does not include any benefit from future or pending M&A, it does contemplate a 4% to 5% contribution to growth in adjusted earnings per share associated with capital deployment, including M&A completed in 2021, notably MMM and myNEXUS and anticipated share repurchases of at least $1.5 billion in 2022 that we expect will drive our weighted average share count into the range of 243 million to 244 million shares outstanding for the full year.
With respect to seasonality, we are projecting profitability patterns close to our historical ranges and expect to earn approximately 55% of our income in the first half of the year, although earnings in the first and second quarter will be split roughly evenly. Our guidance assumes that our benefit expense ratio will approximate the midpoint of our full year range in the first quarter, which we believe will be a prudent assumption in light of the uncertainties associated with the COVID-19 pandemic.
I am also pleased to announce that our Board recently authorized an increase in our quarterly dividend of more than 13% to $1.28 per share, continuing our track record of increasing our dividend every year since we began paying dividends in 2011. Our new dividend annualizes to $5.12 per share, a yield of approximately 1.2% based on our current share price.
In closing, we are pleased to have delivered another year of strong growth despite significant challenges related to the COVID-19 pandemic. While much of the backdrop remains uncertain, we are committed to managing the uncertainty thoughtfully and prudently. We look forward to making further progress against our strategy and delivering on our financial commitments once again in 2022.
Operator, we will now open it up for questions.
