Humana Inc. is the latest insurer to run into trouble in Obamacare’s individual health-insurance markets.
The
health insurer said that it probably won’t collect enough money to
cover costs for some customers who bought individual plans, and will set
aside what’s known as a premium deficiency reserve. The shortfall is
for 2016 plans that comply with new rules under the Affordable Care Act,
Louisville, Kentucky-based Humana said Friday.
UnitedHealth Group Inc., the biggest U.S. health insurer, said in November
that it might stop participating in the Obamacare next year after
taking losses. One analyst predicted that Humana would follow suit.
“We
expect Humana will exit Health Insurance Exchange marketplaces in 2017
in light of this data and focus on its Medicare Advantage book of
business,” Ana Gupte, an analyst with Leerink Partners, said in a note
to clients Friday. Medicare Advantage is the private-sector version of
the U.S. program for the elderly.
Humana, which is being acquired
by Aetna Inc., said in a regulatory filing that it’s still working to
determine the size of the shortfall. The insurer said it also expects
its individual commercial membership to decline by about 200,000 to
300,000 people by Dec. 31, 2016. The enrollment figure includes plans
sold under Obamacare along with older policies.
The company said
it plans to provide more information on its 2016 outlook when it
releases fourth-quarter earnings on Feb. 10. Excluding costs tied to the
premium deficiency reserve, 2015 adjusted earnings will probably be
$7.75 a share, Humana said. The figure is in line with analysts’
expectations and the company’s November forecast.
Humana is adding
members in Medicare Advantage. Its prescription-drug plan is adding
300,000 to 330,000 customers, and its individual Medicare Advantage
plans will gain 100,000 to 120,000 members, according to the filing. The
group Medicare Advantage business will probably lose about 120,000 to
125,000 members this year, the company said.
