Louisville, Ky.-based insurer Humana reported higher revenue and profit in the first quarter of 2019 as it experienced explosive growth in its individual Medicare Advantage plans during the latest annual open-enrollment period.
So it's no surprise that Humana CEO Bruce Broussard talked up the privatized Medicare Advantage program during the company's Wednesday conference call with investment analysts, just a day after U.S. House of Representatives members held a first-ever congressional hearing on Medicare for All. Some single-payer proposals would eliminate private insurance for almost all medical care.
Broussard told analysts that seniors who opt for a Medicare Advantage plan over traditional Medicare receive a higher level of benefits, better quality and improved outcomes while the program lowers the cost to the healthcare system through care management.
Payments to Medicare Advantage plans are 1% to 2% higher than fee-for-service Medicare spending, when accounting for Advantage plans' coding practices, according to the Medicare Payment Advisory Commission's March report.
Humana's Advantage members who seek care in value-based settings go to the emergency department 7% less and are admitted to the hospital 5% less than members in traditional Medicare, Broussard said.
"Humana does not support any bill that would eliminate any Medicare Advantage or make private insurance illegal," he said. "Insurance and Medicare Advantage create an incentive to have a holistic view of a member, which is critical to the long-term success of the program and the ability to offer greater benefits and more security for individuals."
Still, amid the ongoing debate surrounding Medicare for All, many analysts and policy experts have speculated that Humana would be a clear winner in a proposal that expanded access to public insurance programs, like Medicare and Medicare Advantage, but that didn't go as far as eliminating private insurance. That kind of proposal would also have a better shot at nabbing approval from lawmakers. Broussard has suggested he would be supportive of such a reform.
Broussard later took heat for being an industry "outlier" from the conservative National Center for Public Policy Research.
Humana makes the bulk of its money by selling Medicare Advantage plans. Its individual Medicare Advantage membership grew by about 415,000 members, or 13.7%, to more than 3.4 million as of March 31 over the same time last year. Humana's group Advantage membership also grew 5.1% to 517,900 at the quarter's end. But membership in its Medicare stand-alone prescription drug plan decreased almost 12% to 8.4 million. Humana said it anticipated the decrease because the business is competitive, and the company is no longer the lowest cost plan in any market this year.
Even with that decline, revenue from Humana's retail segment, which consists mainly of Medicare, jumped 15.8% to $14 billion in the quarter.
Humana didn't do as well as in its group and specialty insurance segment. A decrease in fully insured employer and specialty insurance membership drove revenue in that segment down 4.1% to $1.9 billion. Part of the decline stemmed from Humana's sale of some specialty businesses to KMG last year, and the impact of certain one-time incentives and adjustments the company received in the first quarter of 2018 related to its Tricare contract.
Membership in Humana's fully insured group business group sank 11% to 958,000.
Meanwhile, Humana's non-insurance healthcare services business grew revenue 7.8% to $6.1 billion. That business includes pharmacy and provider services and clinical programs such as home healthcare.
In total, Humana's membership totaled 16.5 million at the quarter's end, down less than 1% from the same period a year ago. Because of higher premiums and services revenue, Humana's revenue increased 12.8% to $16.1 billion. Its net income increased 15.3% to $566 million.
The company's consolidated medical benefit ratio, which represents the amount of premiums spent on medical claims and quality improvement activities, rose to 86.2%, from 84.5%, impacted by the influx of Medicare Advantage members who hadn't previously been engaged in clinical programs or appropriately documented under the CMS risk-adjustment model, Humana said.