Humana Shifts Focus From Obamacare To Medicare And Outlook Improves – Forbes
raised its profit forecast for the year as the company focuses on its Medicare Advantage business and expanding its primary care and home care platforms as part of a more “integrated” benefit approach to its customers.
The Louisville-based insurer, which is exiting the individual business under the Affordable Care Act for next year amid mounting financial losses, Wednesday increased its earnings per share guidance to $11.50 from $11.10 for 2017. In the second quarter, Humana’s profits rose to $1.04 billion in the second quarter, or $4.46 per share, compared to $636 million, or $2.06 a share, in the second quarter of last year.
“We have a good feeling going into 2018,” Humana CEO Bruce Broussard told analysts during an hour-long call to discuss the company’s second-quarter earnings with analysts.
Humana, which was unable to complete its merger with due to a successful challenge from the U.S. Justice Department, has now been focused on improving its Medicare Advantage business, which provides benefits to seniors. The company is also working on a more “integrated business approach” to providing health benefits to customers.
Some analysts have seen Humana largely distracted over the last two years as it tried unsuccessfully to merge with Aetna. Meanwhile, the insurer faced large losses providing individual coverage to patients under the ACA and found it was unable to successfully manage the costs of the approximately 150,000 Obamacare customers it has had.
But executives Wednesday indicated Medicare Advantage and pursuing a value-based approach to providing benefits were a large part of Humana’s future.
Across the country, more Americans are choosing Medicare Advantage plans, and Humana has long tried to capitalize on that. Just under 35% of Medicare beneficiaries, or about 20 million Americans, are enrolled in MA plans, which contract with the federal government to provide health benefits for seniors, but some Humana rivals like , for example, recently predicted 50% of U.S. seniors would one day soon be enrolled in such MA plans.
Humana said it has improved the MA plans it is marketing to seniors. On Wednesday, Humana “now expects 74% of its June 30, 2017 Medicare Advantage membership to be in four-star plans or higher for bonus year 2018.”
The ranking system was created under the ACA to guide seniors to cost-effective and higher-quality benefits. Under the Medicare Advantage Star Ratings program, plans are rated on such measures as cutting call waiting times as well as how well they encourage preventive care such as getting regular blood tests for diabetes.
Having high star ratings comes as more seniors are choosing MA plans. As of May, 58 million Americans are enrolled in Medicare. Of that, “Original Medicare” enrollment is 37.9 million, with current MA enrollment at about 20.1 million, according to the Centers for Medicare & Medicaid Services.
“We are pleased that our individual Medicare Advantage business is significantly outperforming our previous expectations, reflecting our focus on operational excellence and the solid execution of our strategy,” Humana chief financial officer Brian Kane said. “We were therefore able to invest this outperformance in 2018 benefit designs, resulting in stable and competitive benefits for 2018 despite certain headwinds, in particular the return of the health insurance industry fee.”