The second-largest Medicare Advantage insurer is preparing to lose several hundred thousand members next year as Medicare Advantage benefits shrink under higher prices.
Louisville, Kentucky-based Humana said it expects to lose the patients as it limits the benefits available and leaves several markets in 2025. The insurance company is making the changes in hopes to increase its profits as the government increases costs.
“Medicare Advantage is seeing a scaling back from many private insurers, mainly because providers found seniors on it were using more of their Medicare benefits than anticipated,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “This led to a dip in profits for providers like Humana, and now they’re looking to cut ties in any way they can to boost their bottom line.”
Humana hopes to improve its margins as it says goodbye to more than 200,000 patients. This year, Humana said it expects to add 225,000 Medicare Advantage members, which is a boost from its original estimate of 150,000.
Currently, Medicare Advantage plans make up 38 percent of Humana’s members and a substantial portion of its premium revenue. Humana said 86 percent of that revenue comes from the Medicare Advantage plans, but as medical costs increase for seniors, the insurer has been forced to make some notable cuts.
Humana’s profits of $679 million in the second quarter are down 29 percent year over year as it looks to change its financial situation.
CEO Jim Rechtin said the majority of the lost members will be from those who lose plan coverage in an unprofitable market, but the “vast majority” will still have a Humana plan offered where they live.
In recent months, many Medicare Advantage patients have complained about the lack of provider options and prior authorization rules under their plans.
Humana made the choice to leave several markets based on higher-than-expected inpatient admissions for Medicare Advantage members, and the company said it expects higher net inpatient costs to continue for the rest of 2024.
Seniors enrolled in Humana’s affected Medicare Advantage plans could be in a tough spot, Beene said.
“If you’re a senior who currently has Medicare Advantage through Humana, now is the time to get clarification on your status for the coming year and make sure no changes are on the way,” he said. “If you find you’re going to face the elimination of services through them, you need to start looking at options to replace that coverage immediately.”
