Nov 09, 2015 |
By Allison Bell
Humana Inc.
(NYSE:HUM) says it will eliminate some individual major medical offerings in
2016 and is not sure how it will serve the individual market in 2017.
Humana
discussed its concerns about the state of the individual health insurance
market Friday, when it released its third-quarter earnings.
Individual
claims have been higher Humana expected, in part because enrollees have been
making heavy use of emergency room services and out-of-network providers.
Because claims
have been so high, the individual commercial medical business has been losing
money this year, the company said.
The company is
responding by reducing the number of individual products it will offer in 2016,
both inside the Patient Protection and Affordable Care Act (PPACA) exchange
system and outside the PPACA exchange system. Some of the products dropped will
be broad-network plans and platinum-level exchange plans.
The plan cuts
could affect about 100,000 people, Humana said.
"The
deterioration in claims experience for this line of business in [the third
quarter of] 2015, if it continues, would reduce the likelihood of achieving the
level of profitability the company had previously anticipated for this business
in 2016," Humana said. "The company continues to evaluate its
participation in this line of business for 2017."
Aetna Inc. (NYSE:AET) hopes to acquire Humana
sometime between June 30, 2016, and Dec. 31, 2016, and Humana has stopped
holding routine earnings conference calls with securities analysts while the
deal is pending.
The company as
a whole is reporting $314 million in net income for the quarter on $13 billion
in revenue, compared with $290 million in net income on $12 billion in revenue
for the third quarter of 2014.
The company's
retail segment, which includes individual medical coverage sold outside of the
Patient Protection and Affordable Care Act (PPACA) exchange system and through
the PPACA exchange system, is reporting $325 million in pretax income for the
latest quarter, down from $346 million in the year-earlier quarter.
The company
ended the quarter providing or administering medical coverage for 14 million
people, 3.1 percent more than it was covering a year earlier.
Enrollment in
the company's individual Medicare Advantage plans increased 14 percent, to 2.7
million, and the number of people using the company's Medicare supplement
insurance coverage jumped 22 percent, to 157,100.
Enrollment in
fully insured in group plans fell 3.7 percent, to 1.2 million, and the number
of people covered by the company's individual commercial medical plans shrank
11 percent, to 963,700.
The number of
people covered by Humana plans sold through the PPACA exchange system increased
1.4 percent, to 609,600. The number with Humana individual coverage purchased
off-exchange rose 62 percent, to 204,800.
But Humana saw
use of older, "grandfathered" or "grandmothered" individual
policies, which do not have to comply with all of the new PPACA underwriting
and benefits mandate rules, fall 58 percent, to 149,300. The increase in use of
PPACA compliant policies was not big enough to offset the drop in use of the
old-rules policies.
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