Humana posts first quarter earnings despite health reform 'uncertainty'

Reuters: Humana, a large provider of Medicare plans, projected second-quarter profits ahead of estimates. Reuters reports that pre-market trading reflected gains but shares then fell 2.8 percent in the morning as a result of "uncertainty" stemming from the new health law. "Humana is the second major health insurer to report results since Congress passed an overhaul of the health system. Last week, UnitedHealth Group Inc's (UNH.N) profit soared past Wall Street estimates, but fears that the new reform law will prevent such gains in the future undercut investor enthusiasm. Wall Street is especially concerned with the hit to profits next year from regulations that mandate the amount the insurers spend on medical costs." Humana executives said on a conference call with analysts that they "felt comfortable with their exposure to the regulations in the employer-based markets but may have to adjust to the regulations for its plans for individual members" (Krauskopf, 4/26).

The Wall Street Journal: Humana's CEO Michael McCallister "said Humana hasn't yet changed any business practices to achieve upcoming minimum requirements for medical cost ratios under the health-care overhaul. Regulators are working on the specifics of those regulations now. Chief Operating Officer James Murray said the company will have 'some issue' meeting the 80% minimum for individual plans, as its ratio for that segment runs lower than that now, and is more comfortable with the requirements for small- and large-group plans" (Wisenberg Brin, 4/26).