MA membership growth drives strong quarter for Humana
Earnings reached $956 million, revenues came in at $26.7 billion and the insurer expects continued growth in MA and Medicaid.
Photo: Raymond Gehman/Getty Images
Due in part to "better-than-expected" membership growth in Medicare Advantage, insurer Humana announced in its quarterly earnings call this week that it had logged a strong second quarter, collecting earnings of about $956 million, a 37.8% increase over the $697 million it earned during the same period last year.
Revenue also showed a 13% improvement over Q2 2022, hitting $26.7 billion for the quarter. President and CEO Bruce Broussard said this figure outperformed market estimates.
WHAT'S THE IMPACT
Humana's Medicare Advantage numbers were somewhat surprising given the company's initial expectations. The insurer now expects that 2023 MA numbers will see an 18% increase over last year, with approximately 825,000 new members.
"Results for the quarter include the impact of the higher than anticipated Medicare Advantage utilization recently disclosed, which has stabilized and is tracking in line with our updated expectations," said Broussard.
A June 16 filing with the Securities and Exchange Commission showed that this high utilization among its members was resulting in high benefit expenses, driven in part by strong MA membership growth during the open enrollment period, which included a higher-than-expected proportion of age-ins. They tend to run a higher benefit expense ratio than the average new member, Humana said.
Humana and UnitedHealthcare together account for 46% of all Medicare Advantage enrollees nationwide, according to KFF.
"We made the assumption that we would continue to experience moderately higher-than-expected (utilization) trends for the remainder of the year," said Humana CFO Susan Diamond during the earnings call. "We were pleased to see that our June paid claims data received in July reflected positive restatements for the first quarter, as well as stabilizing outpatient utilization levels in April and May. While July claims data is not yet complete, early views support our year-to-date booking levels."
Broussard said its MA membership growth has been "high-quality" growth supported by "better-than-expected retention and a greater proportion of our new sales coming from competitors than initially planned."
He expected MA growth, both at Humana and more broadly across the healthcare industry, to continue into 2024.
The high utilization rates, said Diamond, were offset by "better than expected favorable prior year development, more positive midyear Medicare risk adjustment payments and slightly favorable investment income," as well as stronger-than-anticipated performance across other business segments, particularly Medicaid.
She added that the company is expecting Medicaid membership to grow by between 25,000 and 100,000 members for the full year. While some membership loss will likely occur as a result of Medicaid redeterminations, the Oklahoma Care Authority recently recommended Humana to cover the state's Medicaid beneficiaries. That, combined with new contracts inked earlier this year in Louisiana and Ohio, will leave the insurer with an estimated 1.5 million Medicaid members across nine states by the end of 2024.
THE LARGER TREND
Since 2006, enrollment in Medicare Advantage plans has grown steadily.
In 2022, more than 28 million people were enrolled in a Medicare Advantage plan, accounting for nearly half or 48% of the eligible Medicare population, and $427 billion (or 55%) of total federal Medicare spending, according to KFF.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
