- Humana raised its guidance for the year after experiencing increased growth in its Medicare Advantage business during the third quarter. The Louisville, Kentucky-based insurer now expects to grow MA membership by 17% to 530,000 members by year's end, up from its previous forecast of 480,000 to 500,000 members.
- Humana beat analysts' expectations for earnings as it reported adjusted income of $869 million during the third quarter, or $5.03 per share, compared to the prior-year period of $922 million, or $4.58 per share. Revenue for the quarter was at $16.2 billion, up year over year from $14 billion. Shares were up slightly in morning trading.
- Still, the company has been preparing for a meaningful headwind as the health insurance fee is reinstated in 2020. CEO Bruce Broussard said the payer trimmed 2% of its workforce and warned that some members will experience an increase in premiums and a reduction in benefits as a result of the HIF.
Executives used the call with investors Wednesday morning to warn about potential affects of the HIF and urge Congress to address the fee. Payers have aggressively lobbied lawmakers to further delay implementation.
Part of the Affordable Care Act called for collecting an annual fee from health insurers to fund portions of the law, though Congress placed a moratorium on the fee for 2019 (and some years previously).
The health insurance fee is set to go into effect next year if Congress does not intervene. In 2018, the fee was in place and collected about $14.3 billion from insurers, according to the IRS.
Experts have noted that insurers tend to pass on the fee by raising premiums for members. Humana said some members will have higher premiums and lowers benefits as a result of the HIF.
"We began preparing for the return of the health insurance fee, or HIF, last year, working diligently to identify ways to improve our cost structure by leveraging technology to streamline processes," Broussard said Wednesday.
Executives said the company prepared for the HIF by removing management layers, using automation wherever possible and rationalizing its real estate portfolio — changes that should help the company regardless of whether the tax goes into effect next year, executives said.
"Thanks for that discussion about the HIF for next year and its impact, hopefully somebody hears that," Peter Costa, an analyst for Wells Fargo, said during Wednesday's call.