Dive Brief:
- Humana announced a 30% drop in profits for Q4 2015 as a result of high costs incurred by new enrollees in its public exchange health plans.
- Last year, the company reported a decrease in its net income in the 2014 final quarter from $145 milllion to $101 million. That is a dip from profits of 94 cents per share to 67 cents, which also factors in a charge of 74 cents a share for a premium deficiency reserve "related to certain of its 2016 individual commercial policies."
- Humana is in good company with numerous other insurers struggling with the health costs of their new ACA enrollees, including UnitedHealth Group, Aetna, Anthem, and several independent Blue Cross and Blue Shield plans, as Forbes notes.
Dive Insight:
Humana's experience in late 2015 raises the question of whether it will continue to participate in the exchange business after 2016, though that question is also tied up in whether and when the insurer completes its merger with Aetna later this year.
Humana wrote in a news release, “The benefit ratio associated with many of the company’s individual commercial products, in particular ACA-compliant offerings, significantly exceeded its pricing expectations." It added, "The company continues to evaluate its participation in the individual commercial business for 2017.”
The sentiment echoes that of UnitedHealth, which has also previously stated that it would be evaluating whether to continue its participation in 2017, though as Forbes notes, the statements could really be intended to pressure the federal government into making the marketplace and its requirements more favorable for insurers.
If Humana, based in Louisville, Kentucky, is acquired by Aetna later this year, its 2017 plans will be in the hands of Aetna's Mark Bertolini, and that merger is inching closer to reality with the recent approval of Kentucky's State Department of Insurance commissioner Brian Maynard.