Humana takes next step towards CEO’s “Medicare Advantage for All” gamble
I agree with Charles Gaba. Medicare Advantage is not much better than Commercial Healthcare Insurance. To wit, it is Commercial Healthcare Insurance gussied up to look like FFS Medicare. The extra benefits given to enrollees in Medicare Advantage comes from FFS Medicare expenditures. Furthermore, the companies providing healthcare to those on Medicare bid low and are paid high:
“benchmarks and payments remain above FFS spending levels. We estimate that in 2022, MA benchmarks (including quality bonuses)average 108 percent of FFS spending (before adjusting fully for coding intensity; see Table 12-6). Similarly, benchmarks in 2021 averaged 108 percent of FFS (data not shown), while MA plans bid at record low levels.” MedPac Page 427.
Even then MA plans over code their policies to the tune of #12 billion in 2020 as reported. MedPac Page 439.
Of course, the CEO of Humana advocates for MA plans. The profit margins are greater than group healthcare plans.
Like it or not, four years later Humana takes next step towards CEO’s “Medicare Advantage for All” gamble (updated), ACA Signups, Charles Gaba.
Before I start, let me say that I’ve never been a fan of Medicare Advantage, at least as its currently structured, for a number of reasons. I am not advocating for the Medicare Advantage system–again, as currently structured–to be expanded.
Having said that, the trend has been inevitable: Medicare Advantage has steadily increased its share of total Medicare enrollment for years, from 19% in 2007 to 48% in 2022 according to the Kaiser Family Foundation (the official October 2022 CMS Medicare enrollment report puts it a bit lower, at 46.3%). Either way, the point is that MA is on track to overtake traditional, “fee for service” Medicare within the next few years and become the default choice for new enrollees.
Back in 2019, I took note of an article posted at the National Center for Public Policy Research (a free-market, conservative think tank):
HUMANA CEO REFUSES TO JOIN HEALTH INSURANCE PEERS IN OPPOSING “MEDICARE-FOR-ALL”
Given an opportunity today to walk back prior support for “Medicare-for-All,” Humana CEO Bruce Broussard refused, effectively making himself an industry outlier. Asked about his responsibility both to shareholders and to those receiving care through Humana, which would be abdicated during a government takeover of health care, Broussard told a representative of the National Center for Public Policy Research’s Free Enterprise Project(FEP) that he considered “Medicare-for-All” a “relative description” and would not comment on legislation widely championed by the left.
. . . Humana serves approximately 23 million people through its medical and specialty services.
At the Barclay’s Global Healthcare Conference last month, Broussard was quoted calling the “Medicare-for-All” idea a “great opportunity for the industry to be able to expand the population that it’s coordinating care with.”
. . . Broussard’s refusal to engage on “Medicare-for-All” is in sharp contrast with other health care leaders. Earlier this week, United Health Group CEO David Wichmann said “Medicare-for-All” would “destabilize the nation’s health care system” and “surely jeopardize” relationships with patients. Seema Verma, the federal administrator of Medicare, called it the “biggest threat to the American health care system.”
As I noted at the time:
Obviously the Humana article has to be taken with a big grain of salt given the source, but this really cuts to one of the most important philosophical and political issues which will have to be dealt with as the battle for universal healthcare coverage kicks into even higher gear: Just how much of a role, if any, should the private insurance industry continue to have…and how many adversaries are healthcare reform advocates willing to go to war with simultaneously?
. . . Under a Bernie Sanders-style “pure” universal single payer system, the entire private insurance industry would be virtually wiped out (or at least reduced to perhaps 6% of their current size, anyway) while also severely slashing payments to hospitals, doctors, clinics and drug companies…so it’s no wonder that they’ve already banded together into a massive new coalition called the “Partnership for America’s Health Care Future“, which includes AHIP, BCBSA, the AMA, the AHA and other major healthcare industry players.
…With this in mind, Broussard’s comments (along with [then Aetna CEO Mark] Bertolini’s statement two years ago, although he’s since retired) take on an interesting tone. What it boils down to is this: Health insurance companies don’t really care who pays the bills as long as they get their cut. Both men seem to be suggesting that they’d be satisfied with a “Medicare for All”-like system as long as it was managed Medicare…basically “Medicare Advantage for All”.
Humana to Exit Employer Group Commercial Medical Products Business
LOUISVILLE, Ky.–(BUSINESS WIRE)– Humana Inc. (NYSE: HUM) today announced that it will be exiting the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. No other Humana health plan offerings are materially affected. The company remains committed to the long-term growth of its core Insurance lines of business, including Medicare Advantage, Group Medicare, Medicare Supplement, Medicare Prescription Drug Plans, Medicaid, Military and Specialty (Dental, Vision, Life, etc.), as well as its CenterWell healthcare services business.
Following a strategic review, the company determined that the Employer Group Commercial Medical Products business was no longer positioned to sustainably meet the needs of commercial members over the long term or support the company’s long-term strategic plans. The exit from this line of business will be phased over the next 18 to 24 months. The company is committed to ensuring a smooth transition of services for members and commercial customers.
“This decision enables Humana to focus resources on our greatest opportunities for growth and where we can deliver industry leading value for our members and customers,” said Bruce D. Broussard, Humana’s President and Chief Executive Officer. “It is in line with the company’s strategy to focus our health plan offerings primarily on Government-funded programs (Medicare, Medicaid and Military) and Specialty businesses, while advancing our leadership position in integrated value-based care and expanding our CenterWell healthcare services capabilities. We are confident in Humana’s continued success, and our commitment to improving the health of those we serve is unwavering.”
Yep, Broussard is still CEO of Humana. And it appears that his viewpoint from 2019 remains steadfast throughout the COVID pandemic years. He has actually grown more confident in it.
As Larry Levitt of the Kaiser Family Foundation noted in a Twitter thread yesterday:
Humana, a for-profit private insurance company, has announced that its entire business model will now be serving “public” programs like Medicare and Medicaid.
…Gross margins in Medicare Advantage plans are substantial. It’s a profitable line of business for insurance companies.
…With employer-based health insurance stagnant, Medicare and Medicaid have been the biggest sources of profit growth for insurers. Medicare Advantage, in particular, is quite attractive with evidence of government over-payments.
The press release doesn’t specify what Humana’s plans are for the individual (nongroup) insurance market…which basically means ACA exchange plans…but my guess is that they’ll stick around there since a) the individual market is growing under the enhanced ACA subsidies of the ARP/IRA, and b) those very subsidies mean that ACA exchange plans are effectively “public programs” as well, at least in this context.
UPDATE: D’oh!! Louise Norris reminds me that Humana had actually already pulled out of the entire Individual Market way back in 2017 already. . . in fact, I even wrote about it at the time! For some reason I thought they had jumped back in more recently, however. Guess not.
My wife had an appointment with her PCP yesterday and felt she was on a time clock with not enough time allowed to discuss the important issues.
We heard yesterday from a friend in Madison, WI that her son-in-law is leaving his gastroenterology position of two decades as a large corporation is now the owner, and he feels he can no longer do his job.
Crprod:
I am hoping Charles is wrong in believing MA will supersede Traditional Medicare which still needs to more efficient in its cost allowance within itself. As I noted in the beginning, MA is allowed to charge more even though they bid less, and charge beyond what an already excessive amount Traditional Medicare charges. Berwick even noted Traditional Medicare treatment incurs 30% waste. So why allow MA to do more? The politics of Big Medical Business having greater influence.
I have experienced similar also as far as getting the boot out the door. Hopefully your friend’s son-in-law finds a secure place to land. It will not be easy.
Mrs Fred had much experience dealing with Medicare for her aged mother before we reached eligibility, and from that we decided that Medicare Advantage (provided for us by Blue Cross) would be worth trying, as the difficulties of wrangling with dispbursement issues with Soc Sec and separate providers for the aspects that were provided under her mother’s coverage by other provders were too damn complicated. We have had no difficulties to speak of with Medicare Advantage as provided by BC/BS in Massachusetts. Are they making substantial profits off this? Maybe. That is the American way, no?
Fred:
No, it is not the American way to make extreme profits off of healthcare and the sick to which commercial healthcare is accustom doing.
My wife and I have had no disbursement issues with Medicare. Thousands of people have experienced similar. I do not know what you were doing. Hospitals, doctors, etc. bill Medicare directly. We do not get involved and no one harasses us as it used to be with commercial healthcare insurance. That your wife had to be involved tells a different story. Competency to handle your own care can raise a number of issues. You select your own doctors and most accept Medicare. It is your responsibility to ask the questions also.
There is nothing to support your contentions Fred than your personal experience. Medicare Advantage can not compete head to head. The US overpays Medicare Advantage because it can not compete.
I recall our ‘disbursement issues’ (for her mother’s needs) were not with Soc Sec, but with her Supplemental Care providers. We felt it would be easier for us to deal with BC/BS for all our med care needs than to deal with Soc Sec and whichever Supp Care providers we could have chosen to deal with. One suspects that many feel this way.
BC/BS OF MA ANNOUNCES LATEST RESULTS
… reported a combined after-tax fourth quarter net income of $42.7 million on revenue of $2.2 billion. These results reflect an operating and other loss of $1 million (-0.07% operating margin), and an investment gain of $43.7 million. …
Blue Cross continues to develop innovative new products and services for its members and employer customers to help provide timely access to care at a lower cost. One example is the company’s new virtual PCP option, which offers zero-dollar cost sharing for primary and mental health care visits with a member’s designated virtual care team clinicians.
For the full year 2022, Blue Cross reported a combined net gain of $177.9 million on revenue of $8.7 billion (2% net margin). These results reflect an operating and other gain of $31.1 million (0.34% operating margin), and an investment gain of $146.8 million. …
Blue Cross’ notable accomplishments in 2022 included:
Named top health plan in Massachusetts for member satisfaction for the sixth consecutive year by J.D. Power, a global leader in consumer insights.
Recognized as a top-performing health plan in the country for quality by the National Committee for Quality Assurance with 4.5 out of 5 stars.[
Earned high ratings from the Centers for Medicare & Medicaid Services for Medicare plans, including an overall rating of 4 stars out of 5 for its Medicare Advantage PPO and HMO plans CY2023. …
(My father was in the – non-health related – insurance biz for his entire life, mainly as an agent. His POV was that Insurance Companies were all about making profits on their investments – if possible – and breaking even overall, which I think he understood from the writings of Ben Franklin, insurance – and shared-risk – whiz.)