Humana to focus on Medicare Part D and Medicare Advantage patients in 2017
Humana will continue to focus its efforts on the growing population of aging seniors in the U.S., the insurance company said during its annual shareholder meeting Thursday.
The Louisville, Kentucky-based insurer is celebrating a good fiscal year despite its very public breakup with Aetna and its decision to pull out of the individual insurance marketplace next year.
Humana CEO Bruce Broussard said during the meeting that it was "quite remarkable" how the company performed during the two years of merger talks, citing growth in revenue and membership for its primary demographic Medicare Part D and Medicare Advantage patients.
The country's aging baby boomer population represents a significant opportunity for healthcare companies. In 2016, about 41 million Medicare beneficiaries, or 71% of all Medicare beneficiaries nationwide, were enrolled in Part D plans, while 17.6 million beneficiaries – 31% of the Medicare population – were enrolled in a Medicare Advantage plan, according to a 2016 study published by the Henry J. Kaiser Family Foundation.
A merger between Humana and Aetna would've accounted for 25% of Medicare Advantage enrollment nationwide – more than UnitedHealthcare, which covered 21% of the Medicare Advantage population in 2016, according to another 2016 study published by the Kaiser Family Foundation.
Humana and Etna called off their proposed $37 billion merger in February after working on the deal for close to two years. They decided not to appeal a federal court's decision to block the deal based on antitrust purposes. Humana announced hours later that it would not sell health coverage on the ACA exchanges next year.
When asked about the possibility of taking an active role in shaping new healthcare policy, Broussard said the company will focus on improving the health of the country's aging population.
"Our engagement with the administration and Congress is really around how can we advance taking care of seniors and our engagement is not around non-Medicare Advantage or non-Medicare businesses because we find that's really not where we can best serve the society as a whole," Broussard said during the meeting.
Humana expects some financial fallout from its decision to exit the exchanges. The company had an operating loss of $1.37 per diluted common share in 2016 for its individual commercial business due to the company's planned exit. Diluted earnings per common share dropped from $8.44 in 2015 to $4.07 in 2016, according to generally accepted accounting principles.
Humana projects an operating loss of approximately $45 million pretax, or $0.17 per diluted common share, for its individual commercial business in fiscal year 2017 stemming from its decision to pull out of exchanges.
Also during the meeting, shareholders voted to elect the board of director's nominees, affirm PricewaterhouseCoopers as its accounting firm, approve executive compensation agreements as well as a proxy access proposal.
The California Public Employees' Retirement System and the New York City Pension Funds proposed the proxy access plan including ownership of at least 3% of Humana's outstanding stock, three years of continuous ownership and the right to nominate up to a quarter of the company's board. The systems have a combined $480 billion in assets and own 846,000 shares of Humana stock.
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