Humana bleeds 550K Part D members amid 'winner take all' market

Humana's Medicare Advantage enrollment is up 17% from 2018, the insurer said in its quarterly earnings on Wednesday.

But, Humana reported a loss of approximately 550,000 customers on its Medicare Part D prescription drug plans. 

The drop in Medicare Part D plans wasn’t unexpected. In February of last year, the insurer projected 700,000 people would drop out of Part D plans in 2019, because of increased competition that was chipping away at the insurer’s market share.

"This business is exceedingly price-competitive, with a winner take all dynamic," Kane said. "We made important changes in 2020, re-positioning our [prescription drug plan] offerings have the lowest price offering in many markets."

MA membership was 3.5 million at the end of 2019, and Humana expects its 2020 individual Medicare Advantage membership to grow between 270,000 to 330,000 members, up to 9.2% growth compared with last year.

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Humana reported on Wednesday a full-year 2020 earnings guidance in a range of $18.25 to $18.75 per share. Humana bested earnings forecasts for the fourth quarter of the year with $2.28 per share on an adjusted basis versus the $2.20 that was expected thanks in part to the strong MA growth. That's $512 million in profit for the quarter.

“We are pleased with our 2019 performance, particularly our success in balancing and executing on multiple priorities as we grew membership, improved the quality and productivity of our operations, and continued to invest in the long-term," CEO Bruce Broussard said in a statement.

The insurer reported revenue for the fourth quarter of 2019 was $16.2 billion, compared with $14 billion in the fourth quarter of 2018. Fourth-quarter revenues for the insurer’s retail segment were $14.21 billion, up from $2.17 billion thanks to higher premiums due to Medicare Advantage membership growth, the insurer said.

Humana’s retail insurance segment increased by 17% for 2019 to $56.47 billion compared to 2018.

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“Seniors are increasingly choosing Medicare Advantage plans, and Humana’s value proposition, consumer orientation and strong brand resonate in the market,” Kane said.

Humana also reported declines in revenue for its group and specialty business segments, which includes the company's employer business and specialty insurance benefits such as dental, vision and life insurance. The segment also includes Humana's military services business and administrative services only products where an employer hires Humana to process claims but the employer pays them. 

The insurer's 2019 revenue in this segment was $7.53 billion, down about 2% from 2018. Part of the reason was a reduction in premium revenues due to the loss of business when Humana sold off a block of its long-term care life insurance business in the second quarter of 2018.