- Humana slashed its forecast for how many Medicare Advantage members it expects to pick up in 2022, sending shares tumbling 19% on Thursday compared with the prior close.
- CEO Bruce Broussard said members were active shoppers during the most recent open enrollment period, creating churn in the industry, which resulted in Humana losing members to other insurance carriers.
- The Louisville-based insurer now expects to add between 150,000 to 200,000 Medicare Advantage members. It previously forecast between 325,000 and 375,000 members.
Competition in the latest open enrollment period was "very aggressive" as Humana's competitors came in with lower prices and spent more on marketing to attract customers, Broussard said during a Goldman Sachs virtual conference Thursday.
The CEO questioned whether his competitors' tactics will be a sustainable business practice, in an apparent attempt to assure investors Humana's strategy is more favorable.
"We've seen people become very aggressive early on; buy share and then in result they don't keep the customer because they have to change the benefits and, in result, they lose that share," Broussard said.
Humana is not typically the lowest-priced plan in the market, Broussard said, an intentional strategy for the second-largest Medicare Advantage carrier behind UnitedHealthcare.
"We've always held that we don't need to be the cheapest because there's much more value we offer outside of just the product itself that we're selling," Broussard said.
The issue was specifically based on retaining current members, he added, noting that new sales came in as expected.
The regions that were affected by these aggressive pricing tactics include Los Angeles, Florida — Humana's core market — and various areas of the Southeast and Midwest, he said.
Broussard said the lower forecast does not signal a change in trend for Medicare Advantage, which has continued to see growth in membership every year since the early 2000s. In 2021, MA enrollees made up 42% of the total Medicare population, a figure that is projected to swell to 51% by 2030, according to the Kaiser Family Foundation.