Dive Brief:
- Humana is planning to exit the employer insurance business as it pivots to solely focus on government-sponsored health programs like Medicaid and Medicare.
- That means Humana will no longer offer commercial health insurance plans to employers looking to extend health coverage to their workforce, including through self-funded and fully insured plans.
- Humana will wind down its commercial business over the next 18 to 24 months, the company said Thursday.
Dive Insight:
After launching a review of its business, Humana said the employer segment no longer meets the company’s long-term strategic plans.
The pivot will allow Humana to focus on the “greatest opportunities for growth,” CEO Bruce Broussard said in Thursday’s statement.
Medicare can be a lucrative business for health insurers. The gross margins per member each month in 2020 were higher for Medicare Advantage members than those in group plans, according to a prior analysis from the Kaiser Family Foundation.
“With employer-based health insurance stagnant, Medicare and Medicaid have been the biggest sources of profit growth for insurers,” Larry Levitt, executive vice president for health policy at KFF, tweeted Thursday in response to Humana’s announcement.
However, in January, federal regulators said they will crack down on the MA program through overpayments that are sometimes made to insurers. The CMS is poised to claw back billions from insurers as part of the bid.
In the other major government line of business, Medicaid, enrollment has soared since the start of the COVID-19 pandemic as regulators relaxed rules to allow members to maintain continuous coverage during the public health emergency. The enrollment flexibility will soon end as states can begin resuming eligibility checks April 1. Millions are expected to lose coverage.
The announcement follows a reorganization Humana launched last year, in which it formed two distinct units, one focused on healthcare services and the other on insurance coverage.
Humana reported net income of $2.8 billion in 2022, a 4.3% decline from the prior-year period. The payer ended the year with 17 million members, flat year over year, with a considerable bump for Medicaid plans.
