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Humana's earnings: 3 takeaways

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Another health insurer has come out with earnings, and that company seems to be repeating a familiar refrain: The old-rule, transitional policies are more of an immediate concern than the new public exchange policies.

Executives from Humana Inc. (NYSE:HUM) talked about their company’s Patient Protection and Affordable Care Act (PPACA) exchange plan business and other commercial health insurance operations while going over third-quarter results with analysts.

Like many other publicly traded health insurers, the company has been bringing in more revenue and somewhat lower profits, and spending more time thinking about the intricacies of the PPACA “three R’s” risk management programs.

For more on what has been happening at Humana, read on.


1. The company and its commercial health insurance operations did well.

The company as a whole is reporting $1 billion in net income for the latest quarter on $36 billion in revenue, compared with $1.3 billion in net income on $31 billion in revenue for the third quarter of 2013.

The company ended the quarter providing or administering health coverage for 14 million people, or 11 percent more than it was covering a year earlier.

Full insured employer group enrollment increased 1.1 percent, to 1.2 million, and enrollment in group plans the company administered fell 4.2 percent, to 1.1 million.

Enrollment in individual medical plans — including the qualified health plans (QHPs) sold through the PPACA exchange system — jumped to 1.1 million, from 493,000 a year earlier, before the exchange system opened.

Unlike most competitors, Humana is breaking out enrollment results for on-exchange and off-exchange business, as well as for “legacy” individual policies that do not comply with all of the PPACA requirements that now apply to new major medical policies.

The company has about 601,400 enrollees in on PPACA exchange QHPs, 128,400 enrollees in PPACA-compliant policies sold off the exchange, and 358,000 people in legacy policies. Enrollment in the legacy policies is down from 493,000 a year earlier.

See also: 5 more ways a Republican Congress could change PPACA

2. The exchange QHPs seem to be doing pretty well.

Brian Kane, Humana’s chief financial officer, said the company’s individual business as a whole will lose about $60 million this year, “all in.” 

But “we’re hopeful that we’ll break even this year on the exchange side,” Kane said.

Bruce Broussard, the company’s chief executive officer, said the exchange plans have met their financial targets. 

Humana executives noted that two of the three big PPACA risk-management programs, the reinsurance program and the risk corridors underwriting margin buffer problem, are supposed to start shrinking in 2015. But executives expect the QHPs to break even in 2015.

See also: When exchange users die: 3 do’s and don’ts

Micro business

3. Humana is not thrilled with the employers that were happy with their policies and kept the policies.

Kane lumped “the continuing adverse impact of the extension of transitional policies for our small group business” together with the cost of treating Hepatitis C as some of his least-favorite market forces.

See also:

Health insurer earnings: 7 takeaways

Assurant and Cigna: More haelth earnings takeaways

WellPoint earnings: 5 PPACA takeaways


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