Humana outlines ACA market withdrawal in Q2 earnings report
- Humana released its Q2 earnings for FY 2016 on Wednesday.
- The insurer stated it expects it will offer individual coverage plans in "no more than 156 counties" across 11 states next year.
- The move marks a withdrawal from 1,195 counties both on and off the ACA market. Currently, Humana offers coverage through the ACA market in 15 states.
Humana had already indicated it would cease to sell individual plans in at least four states (Kansas, Wisconsin, Alabama,and Virginia). With the new earnings report, Humana gives a bit more detail into how those actions may look.
Some good news is that Humana does plan on selling individual coverage next year. But Humana never had a large stake in the ACA markets, enrollment-wise. Out of millions of individuals that picked up health coverage through an ACA plan, Humana only provides coverage for a fraction of that. As of last March, Humana only provided coverage for 554,300 individuals. However, this does seem to be in line with the Big Insurance hive mind where the larger players are cherry picking markets they see as desirable. For example, Cigna is looking to sell ACA-compliant plans in the Chicago market.
In FY 2016 Q2, Humana booked 792,000 individual policyholders as of June 30, down 24% from the same time period the previous year (June 30, 2015) and down 12% from the end of last year (December 31, 2015).
However, the insurer doesn't anticipate much revenue from ACA coverage next year. "Humana expects 2017 premiums associated with ACA-compliant offerings in the range of $750 million to $1 billion versus approximately $3.4 billion projected for FY16 reflecting the adjustment to the company’s geographic presence, partially offset by premium increases pending regulatory review," the earnings report noted.
In addition to the woes associated with scaling individual coverage on the ACA market, Humana lost a fair share of individual policyholders last year with some discontinuing ACA-compliant coverage or loss of membership or termination "by CMS due to lack of eligibility documentation and lower membership in legacy (non-ACA-compliant) plans."
The on-exchange plans for next year are not set in stone however, the carrier noted. The plans still have to be approved by state and federal regulatory agencies.
Overall, Humana reported pre-tax income of $636 million in Q2, down FY 2015 Q2 of $793 million. Consolidated revenues for Q2 were $14.01 billion, a 2% increase from $13.73 billion in Q2 2015.
Yesterday, Humana and Aetna announced they both would sell off Medicare Advantage assets and have entered into separate agreements with Molina Healthcare for a total estimated $117 million in cash for both transactions.
As a result of the Medicare Advantage deals, Molina is expected to gain about 290,000 Medicare Advantage members in 21 states. The sale was done to ease antitrust concerns over the pending $37 billion Humana/Aetna merger. Last month, the Justice Department filed a suit to block the action as well as the pending Anthem/Cigna merger.
On July 21, Principal Deputy Associate Attorney General Bill Baer stated the agency's investigations show Aetna's acquisition of Humana would hurt seniors that rely on Medicare Advantage. In response to proposed remedies from the insurers including divestitures to smaller market players, Baer also stated the proposed remedies have been impractical, incomplete and are unlikely to assuage the competition concerns.
In the Q2 earnings report, Humana stated the MA transactions "remain subject to the completion of Humana's transaction with Aetna, the resolution of the DOJ litigation, [CMS] approvals and actions and customary closing conditions, including approvals of state Departments of Insurance and other regulators."
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