Powered by Medicare Advantage, Humana profits jump 21% in second quarter

The Louisville, Ky., health insurer both "increased its Medicare Advantage membership," "benefited from patients' recent lower demand for health-care services" and also "sought to get out in front of an anticipated effect of the federal health-care overhaul, taking a charge related to new requirements for its medical-loss ratio," in attaining 21 percent profits, The Wall Street Journal reports. Humana had "a large increase in Medicare Advantage membership, offset by a major slide in employer-sponsored health-plan enrollment. The company, like its peers, reported notably lighter use of services in its commercial health plans." And though profits were strong, "other aspects of the earnings report pointed to difficult times ahead. Humana took a 55-cent charge per share, or a total charge of $147 million, to write down costs from the expected diminished future profitability of policies it sells to individuals" (Johnson and Brin, 8/3).

The Associated Press: "Humana became the latest health insurer to post strong second-quarter profit, following recent reports from such competitors as UnitedHealth Group Inc. and Aetna Inc. that also beat Wall Street expectations. Humana said its lucrative Medicare Advantage business posted double-digit enrollment growth in the quarter. Medicare Advantage plans are government-sponsored, privately run programs for seniors that offer comprehensive health coverage. …  Meanwhile, the company's second-quarter consolidated benefit ratio — the percentage of premiums paid to cover medical claims — also improved from a year ago" (Schreiner, 8/2).

The Associated Press/Bloomberg Businessweek: Humana Inc. President and Chief Executive Michael B. McCallister "told industry analysts during a conference call to discuss quarterly earnings that Medicare Advantage remains a 'tremendous opportunity,' and acknowledged that he's been surprised that more competitors haven't ventured into the market" (8/2).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.