Humana said it is seeing strong enrollment in individual Medicare Advantage plans, its core insurance product, two weeks into the annual enrollment period for seniors.
The insurer said it expects to add between 325,000 and 400,000 individual Medicare Advantage members for 2023, an increase of between 7.1% and 8.7% year over year, executives said during Wednesday’s third-quarter earnings call.
Executives said better benefits are attracting more members. For certain plans, Humana members have an allowance for healthy foods, over the counter items, transportation, health supplies, rent and utilities, CEO Bruce Broussard said.
These benefits address seniors most urgent needs on affordability, Broussard said, “which is especially important given current economic conditions and knowing many seniors are on fixed incomes.”
Humana’s early positioning for 2023 “might be the strongest in recent history,” Morgan Stanley’s Michael Ha said on Wednesday’s call.
The strong initial sales come after Humana stumbled on retaining MA members during the 2022 plan year and slashed its enrollment forecast in early January, causing shares to tumble. Broussard previously said members were active shoppers during the previous open enrollment period, which created churn in the industry, causing Humana to lose members to other carriers.
Humana expects lower attrition in 2023, executives said.
The insurer said utilization was lower in the third quarter compared with the prior-year period as fewer individual MA members were admitted to the hospital.
CFO Susan Diamond said the company was pleased to see the continued shift in orthopedic procedures from an inpatient to outpatient setting, typically a less costly environment for surgeries.
Humana’s revenue increased 10% to $22.8 billion for the third quarter thanks to higher MA premiums and MA enrollment.
Net income declined to $1.2 billion compared with $1.5 billion during the prior-year period.
Humana said it achieved its “value creation plan,” a cost-cutting initiative to identify $1 billion to reinvest back in its core business, MA.