Louisville,
Ky.-based insurer Humana reported higher revenue and profit in the first
quarter of 2019 as it experienced explosive growth in its individual Medicare
Advantage plans during the latest annual open enrollment period.
So it's
no surprise that Humana CEO Bruce Broussard talked up the privatized Medicare
Advantage program during the company's Wednesday conference call with
investment analysts, just a day after U.S. House of Representatives
members held a first-ever congressional hearing on a
single-payer system. Some single-payer proposals would eliminate private
insurance for almost all medical care.
Broussard
told analysts that seniors who opt for a Medicare Advantage plan over
traditional Medicare receive a higher level of benefits, better quality and
improved outcomes while the program lowers the cost to the healthcare system
through care management.
Payments
to Medicare Advantage plans are 1% to 2% higher than fee-for-service Medicare
spending, when accounting for Advantage plans' coding practices, according to
the Medicare Payment Advisory Commission's March report.
Humana's
Advantage members who seek care in value-based settings go to the emergency
department 7% less and are admitted to the hospital 5% less members in
traditional Medicare, Broussard said.
"Humana
does not support any bill that would eliminate any Medicare Advantage or make
private insurance illegal," he said. "Insurance and Medicare
Advantage create an incentive to have a holistic view of a member, which is
critical to the long-term success of the program and the ability to offer
greater benefits and more security for individuals."
Still,
amid the ongoing debate surrounding Medicare for All, many analysts and policy
experts have speculated that Humana would be a clear winner in a proposal that
expanded access to public insurance programs, like Medicare and Medicare
Advantage, but that didn't go as far as eliminating private insurance. That
kind of proposal would also have a better shot at nabbing approval from
lawmakers. Broussard has suggested he would be supportive of such a reform.
Broussard
later took heat for being an industry "outlier" from the
conservative National Center for Public Policy Research.
Humana
makes the bulk of its money by selling Medicare Advantage plans. Its individual
Medicare Advantage membership grew by about 415,000 members, or 13.7%, to more
than 3.4 million as of March 31 over the same time last year. Humana's group
Advantage membership also grew 5.1% to 517,900 at the quarter's end. But its
membership in Medicare stand-alone prescription drug plan decreased almost 12%
to 8.4 million. Humana said it anticipated the decrease because the business is
competitive and the company is no longer the lowest cost plan in any market
this year.
Even with
that decline, revenue from Humana's retail segment, which consists mainly of
Medicare, jumped 15.8% to $14 billion in the quarter.
Humana
didn't do as well as in its group and specialty insurance segment. A decrease
in fully-insured employer and specialty insurance membership drove revenue in
that segment down 4.1% to $1.9 billion. Part of the decline stemmed from
Humana's sale of some specialty businesses to KMG last year, and the impact of
certain one-time incentives and adjustments the company received in the first
quarter of 2018 related to its Tricare contract.
Membership
in Humana's fully insured group business group sank 11% to 958,000.
Meanwhile,
Humana's non-insurance healthcare services business grew revenue 7.8% to $6.1
billion. That business includes pharmacy and provider services and clinical
programs such as home health care.
In total,
Humana's membership totaled 16.5 million at the quarter's end, down less than
1% from the same period a year ago. Because of higher premiums and services
revenue, Humana's revenue increased 12.8% to $16.1 billion. Its net income
increased 15.3% to $566 million.
The
company's consolidated medical benefit ratio, which represents the amount of
premiums spent on medical claims and quality improvement activities, rose to
86.2%, from 84.5%, impacted by the influx of Medicare Advantage members who
hadn't previously been engaged in clinical programs or appropriately documented
under the CMS risk-adjustment model, Humana said.
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