Humana pulls outlooks for Medicaid, small and large group plan memberships due to COVID-19

Humana building
Humana announced that the COVID-19 pandemic didn't have an "inherently material" impact on its first-quarter earnings. (Humana)

Humana has pulled its outlook for Medicaid membership alongside enrollment in small and large group plans due to major uncertainty with the COVID-19 outbreak, but is sticking firm to its 2020 guidance for Medicare Advantage.

The announcement during the insurer’s earnings release and call on Wednesday comes as insurers must try to figure out how COVID-19 will impact their membership and finances for this year and the next.

States are not disenrolling Medicaid beneficiaries and more and more individuals are starting to quality each day, said Brian Kane, Humana’s chief financial officer, during an investor call on Wednesday.

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Humana had expected membership of between 150,000 to 200,000 for the year.

The insurer also scrapped its 2020 membership guidance for small and large group health plans.

Before the pandemic, the commercial membership was in line with expectations. However, small businesses have terminated their health plans and large businesses have reduced their workforce due to state lockdowns sparked by the COVID-19 pandemic.

“We are heavily weighted to the small group business, which we expect ill be disproportionately impacted by the pandemic,” Kane said.

A major issue for Humana has been a decline in sales because field brokers can’t get in front of members, Kane said.

However, the insurer is doing a lot of planning for more virtual visits for sales, said CEO Bruce Broussard.

But one area where membership is expected to increase is its membership on Medicare Advantage, a lucrative and major part of the insurer’s business.

Humana had been expecting to grow its 3.5 million MA members to 270,000 to 330,000 this year. But now it is expecting growth between 300,000 to 350,000 members.

But the insurer is still expecting to bleed 550,000 members in its Part D business due to increased competition.

Strong MA premiums helped Humana beat Wall Street expectations for the first quarter.

Overall, the insurer generated $18.9 billion in revenue compared with $15.6 billion in 2019. Humana’s first-quarter net income of $473 million was down compared to $556 million in the first quarter of 2019.

Humana said that COVID-19 did not materially impact the insurer’s first-quarter finances.

It did say that in the second half of March there was a decline in healthcare utilization due to a cancellation of elective procedures and lockdowns sparked by the pandemic.

However, that decline was offset by an increase in pharmacy costs as Humana allowed members to refill 90-day supplies.