Humana CEO Broussard urges Congress to roll back ACA's maligned health insurance tax

Humana is making "significant investments" to prepare for potential headwinds in 2020, but the impacts of the ACA's health insurance fee loom, executives at the insurer said Wednesday.

Bruce Broussard, Humana CEO, urged Congress to repeal HIF, which is maligned by the insurance industry, on the company's second-quarter earnings call. Eliminating the unpopular tax enjoys bipartisan support, Broussard said.

"We are making significant investments in 2019 to create sustainable customer value and lessen the impact of significant 2020 headwinds on member benefits and premiums in 2020," he said. "That being said, millions of seniors across the industry will likely see a reduction in benefits and/or increased premiums next year from the expiration of the health insurance fee moratorium."

The fee, which is also referred to as the health insurance tax (HIT), has been under a moratorium this year (and was also under one in 2017) but has not been formally repealed by Congress. Introduced as part of the Affordable Care Act, the fee cost insurers big in the law's early years, to the tune of $8 billion in 2014. It cost insurers $14.3 billion by 2018, according to data (PDF) from America's Health Insurance Plans.

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Broussard also noted that as Humana looks ahead to the coming year, it's rethinking its approach to its Medicare Part D plans. The insurer has seen underwhelming growth in that business line, he said and is looking to be more competitive.

"Our PDP design focus for 2020 was to evolve our portfolio to ensure we can offer a competitive product to consumers to achieve our long term membership growth targets," Broussard said.

For 2019, the company's performance in Medicare Advantage continues to grow. Humana is projecting that an additional 480,000 to 500,000 people will enroll in its Medicare Advantage plans this year, higher than its prior estimates of between 414,000 and 440,000. The company said Wednesday morning the new estimates represent a 16% membership growth.

Humana reported earnings of $6.05 per share for the quarter, beating Wall Street's expectations and far outpacing the $3.96 earnings per share it reported in the second quarter of 2018. Revenues were also up year over year, with Humana posting $16.2 billion in revenue in the second quarter of 2019 compared to $14.2 in the same quarter last year.

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"Seniors are increasingly choosing Medicare Advantage because of the program rewards high quality of care, fosters deep relationships, aligns incentives under a consumer-based model designed to manage the sickest, most vulnerable beneficiaries, encourages a holistic view of member health, and creates the competitive market forces that encourage innovation," Broussard said on the earnings call.

"The aging population and the ongoing increased penetration of Medicare Advantage as a percentage of total Medicare eligibles combined with our strong brand and value proposition gives us confidence in our long-term membership growth prospects,"

As a result of the enrollment boosts, Humana raised its earnings projections for the year to $17.60 per share from estimates of between $17.25 to $17.50 per share in the first quarter.