Hundreds of thousands of patients, typically older patients, may face a big change in their health insurance heading into next year.
As associated medical costs increase, private Medicare Advantage providers are being forced to reassess the profitability of providing Medicare Advantage plans. This includes Humana, the second-largest Medicare Advantage insurer.
Medicare Advantage
Medicare Advantage (also known as Medicare Part C) is a health plan offered by Medicare-approved private insurance companies.
While they don’t have to strictly cover every single benefit covered by Medicare Parts A and B, Medicare Advantage plans do need to provide coverage that meets or exceeds the standards of Parts A and B.
Benefits of Medicare Advantage
A public Part C Medicare Advantage plan offers an out-of-pocket annual spend limit, something that original Medicare Parts A and B do not offer.
The beneficiary can set their own out-of-pocket spend limits, which in turn affect premiums, as with all insurance plans. A lower limit incurs a higher premium.
Humana
Humana, a health insurance provider out of Louisville, Kentucky, is one of the largest providers of Medicare Advantage plans in the country.
It is in fact the second largest provider, behind only UnitedHealthcare, accounting for 18% of Medicare Advantage enrollees nationwide. Between them, UnitedHealthcare and Humana account for just under half of all Medicare Advantage enrollees.
A Scaling Back From Insurers
Many private insurers are beginning to scale back their Medicare Advantage offerings, looking to cut ties with the plan to boost their profitability.
According to Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, this scaling back is “mainly because providers found seniors on it were using more of their Medicare benefits than anticipated.”
Humana Part of the Scale Back
Despite its prominent position as a national Medicare Advantage provider, Humana is one of the insurers looking to distance itself from the coverage.
According to Beene, the higher-than-anticipated benefits usage “led to a dip in profits for providers like Humana, and now they’re looking to cut ties in any way they can to boost their bottom line.”
A Loss of Patients Expected
As Humana looks to boost its profits and protect its margins, it anticipates a significant loss of patients.
Humana expects to bid goodbye to 200,000 patients as it shrinks Medicare Advantage benefits and leaves several markets amidst higher costs for providing the coverage and changing government legislation as relates to Medicare.
Medicare Advantage Currently a Large Revenue Source
Medicare Advantage plans are a pretty significant part of Humana’s business, currently accounting for 38% of its members and a significant chunk of its premium revenue.
Humana reports that 86% of this revenue comes from Medicare Advantage plans, but notable cuts are now becoming necessary as medical costs for seniors increase.
Higher Costs Expected in the Future
Humana’s second-quarter profits saw a 29% dip year over year to $679 million, prompting this effort to change its financial outlook.
Humana’s choice to pull back on Medicare Advantage and leave several markets was based on higher-than-expected inpatient admissions for Medicare Advantage members. Humana expects higher net inpatient costs to continue to be an issue for the rest of the year.
Seniors Potentially in a Tough Spot
The majority of those who receive Medicare are over 65. Seniors who are currently enrolled in Medicare Advantage through Humana may soon find themselves in a tough spot.
While the vast majority who will lose plans will still be offered a Humana plan in their area, this latest news comes off the back of many Medicare Advantage patients being unsatisfied with the lack of provider options and prior authorization rules under their plans.
Start Looking at Options
According to Beene: “If you’re a senior who currently has Medicare Advantage through Humana, now is the time to get clarification on your status for the coming year and make sure no changes are on the way.”
He continues, advising Humana Medicare Advantage patients: “If you find you’re going to face the elimination of services through them, you need to start looking at options to replace that coverage immediately.”
Insurance Challenges for Older Americans
Health insurance is a huge point of concern for many Americans, particularly older Americans. Medicare alleviates this stress and provides a valuable lifeline for many, but it is not immune to market pressures.
The volatilities and vagaries of private medical insurance are soon about to impact hundreds of thousands of Medicare recipients. Hopefully, Humana will be able to provide the vast majority of these people with comparable, viable coverage.
