Humana, the second-largest Medicare Advantage insurer, is bracing for a significant membership drop next year due to cuts in benefits and soaring costs.
Based in Louisville, Kentucky, the company announced it will limit benefits and exit several markets in 2025, anticipating the loss of over 200,000 patients. This strategy aims to bolster profits as the government raises costs.
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Despite the anticipated losses, Humana plans to add 225,000 new Medicare Advantage members this year, a rise from its earlier projection of 150,000. Currently, Medicare Advantage plans account for 38 percent of its total membership and a hefty share of its premium revenue, with 86 percent of that revenue stemming from these plans. However, rising medical costs for seniors have compelled the insurer to implement significant cuts.
In the second quarter, Humana reported a profit of $679 million, a sharp 29 percent decline compared to the previous year, forcing a reevaluation of its financial strategy.
CEO Jim Rechtin emphasized that the majority of members lost will come from unprofitable markets, but reassured that most will still have access to a Humana plan in their area.
Recently, many Medicare Advantage patients have voiced concerns over limited provider choices and stringent prior authorization rules tied to their plans.
The decision to exit certain markets was driven by unexpectedly high inpatient admissions among Medicare Advantage members. The company foresees continued rising costs associated with inpatient care into 2024.
For seniors enrolled in affected Humana Medicare Advantage plans, the situation may be concerning. Health expert Beene advises, “If you’re a senior currently using Humana’s Medicare Advantage, it’s important to check your status for the upcoming year and verify any potential changes. If services are cut, consider looking for alternative coverage options immediately.”