Humana Will Phase Out Employer Group Business To Focus On Medicare And Medicaid Health Plans

Humana will exit its “employer group commercial medical products business” over the next 18 to 14 months to focus on government-funded health programs including Medicare and Medicaid.

The business Humana will exit “includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs,” Humana announced Thursday. “Financial results for Employer Group Commercial Medical Products will be adjusted for non-GAAP purposes going forward and are not expected to impact the company’s full year 2023 Adjusted earnings per share (EPS) guidance.”

The move makes sense for Humana, which is best known for selling privatized Medicare coverage for seniors. Such coverage, known as Medicare Advantage, is now the choice of more than half of all Medicare beneficiaries and continues to grow.

Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines with some also offering vision, dental care and wellness programs. And in recent years, the Centers for Medicare & Medicaid Services (CMS) has allowed Medicare Advantage plans to cover more supplemental benefits, adding to their popularity among seniors.

Given Medicare Advantage plans rely on their relationship with the federal government through CMS, the public-private partnership has flourished despite changing administrations and control of Congress over the last two decades.

“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,” Humana’s President and Chief Executive Officer Bruce Broussard said. “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.”

Medicaid, too, has been a boon to health insurance companies since the Affordable Care Act was signed into law in 2010 by then President Barack Obama. The law provided more generous federal dollars toward Medicaid for poor Americans so states that administer such health coverage could expand it for more Americans.

States, in turn, work with private health insurers like Humana to administer Medicaid. In part because of the ACA, there is more business for private health insurers.

The expansion of Medicaid benefits under the ACA has come a long way since the U.S. Supreme Court in 2012 gave states a choice in the matter. There were initially only about 20 states that sided with Obama’s effort to expand the health insurance program for poor Americans. Over the years, more states have agreed to expand Medicaid.

With a ballot initiative’s passage in South Dakota last year, there are now just 11 states yet to expand Medicaid under the Affordable Care Act, according to the latest tally from the Kaiser Family Foundation.

Meanwhile, pressure is mounting for the remaining 11 states, largely in the south, to expand Medicaid. A new report out Thursday from the Kaiser Family Foundation shows “rural hospitals fared worse financially in states that have not expanded their Medicaid” under the ACA.

“Nearly one third of all rural hospitals nationally are in the 11 states that have not approved the expansion of their Medicaid programs to cover low-income childless adults, and concerns about their ongoing viability has been an issue in legislative debates about whether to do so,” the Kaiser report said. “The median operating margin for rural hospitals has been consistently higher in states that have expanded their Medicaid programs than in non-expansion states from July 2017 through June 2022, although the financial stability of individual rural hospitals varies widely.”