Humana to Cut Some Jobs, Add Others

Individual major medical is doing better

Louisville, Kentucky (Photo: Thinkstock) Louisville, Kentucky (Photo: Thinkstock)

Humana Inc. says it began cutting jobs in the third quarter.

The Louisville, Kentucky-based company says it accepted early-retirement offers from about 1,100 employees, eliminated a few hundred open positions, and started the process of laying off about 1,300 workers.

Humana made the cuts as it was pulling away from the individual major medical insurance market and the Affordable Care Act public exchange system.

But Bruce Broussard, Humana's chief executive officer, said during a conference call with securities analysts that the company made the jobs mainly to improve the company's productivity.

"It's really to create capacity, both to be competitive from a benefit design point of view and to invest in the business for long-term competitive positioning," Broussard said.

Humana needs money to do things link expanding care management efforts, Broussard said.

(Related: Humana Completes $1 Billion Note Offering)

Even as Humana was cutting some jobs, it was seeking candidates for about 1,450 open positions, including hundreds related to efforts to prepare for an upcoming expansion of the company's Tricare administration contract.

Tricare is a health benefits program that covers the cost of care for military retirees, military dependents and active-duty military personnel away from military and veterans health care facilities. Humana has been serving as the administrator for the Tricare South Region contract.

Humana is now on track to serve as the administrator of a new Tricare East Region starting Jan. 1. The new Tricare East Region will include both the old Tricare North Region and the old South Region.

Third-Quarter Results

Humana executives held the analyst call mainly to go over third-quarter earnings.

Humana is reporting $499 million in net income for the third quarter on $13.3 billion in revenue, compared with $450 in net income on $13.7 billion in revenue for the third quarter of 2016.

The company ended the quarter providing or administering health coverage for 9.2 million people, up from 8.7 million people a year earlier.

The number of individual major medical insureds fell to 142,800, from 726,200.

Medicare Advantage plan enrollment held steady at 1.1 million.

Enrollment in self-insured employer-sponsored plans fell to 445,700, from 570,300.

2018

Humana has suffered losses on Affordable Care Act plans in recent years, and on ACA programs that were supposed to buffer ACA exchange plan issuers and issuers of individual and small-group major medical coverage against ACA startup problems. The company will withdraw from the individual major medical market entirely in 2018.

The annual election period for the Medicare Advantage plan and Medicare Part D drug plan market started Oct. 15 and will end Dec. 7.

The executives who appeared on the earnings call talked mainly about their hopes for the company's Medicare plan unit, but they said the company will face tougher price competition in the Medicare Part D drug plan market this year.

—Read Health Insurers' Next Affordable Care Act Scare Is Just Two Days Away on ThinkAdvisor.


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