Health plans have taken on the chin during the reform efforts, targeted as the bad guys of the healthcare system by members of Congress and even President Obama. Not only that, efforts by trade group America's Health Insurance Plans to advance its position--that currently proposed reforms could actually raise premiums--have been criticized by Democratic legislators as inaccurate and divisive.
Now, Humana has posted a 65 percent increase in third-quarter profit at a particularly inopportune time--in the final stretch of reform vote--and the health plan is taking some flak from the Hill. Actually, the company's profit was only 4 percent overall, which is nothing to write home about, but its opponents see the increase as an opportunity. Humana is a particularly juicy target, too, given that the health plan recently rubbed some legislators the wrong way by sending letters to seniors charging that reforms would reduce their Medicare benefits.
This week, Humana reported third quarter revenues of $7.44 billion, an 8 percent increase from the $6.99 billion it earned for the same period in 2008. More significantly, it had a net income of $301.51 million for the quarter, a 65 percent increase from the $183 million it brought in for the same period last year. Diluted earnings per share leapt from $1.09 per share to $1.78.
During this period, its Medicare Advantage membership climbed by 146,800 members, to 1.51 million. The plan took in premiums of $4.14 billion during the quarter, up 18 percent from the $3.5 billion it earned during the same period last year. Humana reported spending 81.9 percent of premiums on care, down from 84.1 percent during the same period in 2008.
Meanwhile, its commercial segment showed a pretax loss of $5.2 million in the third quarter, as compared with a pretax income of $11.2 million during the third quarter. Enrollment dropped 127,000 to 3.42 million, down 4 percent from the 3.55 million it reported during the same period one year before. In contrast to the government products, the medical loss ratio went up, climbing to 82.7 percent, versus 80.2 percent in the prior year.
Humana's government segment results are likely to boost the popularity of proposals reducing Medicare Advantage payments and impose new quality incentives. Meanwhile, legislators have been quick to suggest that Humana's profit margin, not legitimate public policy concerns, are fueling its opposition to current reform bills. "It's no wonder why Humana has been misleading seniors about health insurance reform," said Jim Manley, a spokesman for U.S. Senate Majority Leader Harry Reid, in a public statement on the matter.
To find out more about Humana's position:
- read this Bloomberg item
Dear Readers: In this story, we inadvertently left out a word from the text, causing the headline and a phrase in the body of the story to suggest that Humana reported a 65 percent profit margin. The health plan actually reported profits which were 65 percent higher than in same period in 2008, or a net profit of 4 percent. We regret the error.