About Humana Insurance Company

Medicare has made Humana a big-time player in the insurance game. One of the largest Medicare providers and a top health insurer, Humana provides Medicare Advantage plans and prescription drug coverage to more than 7.7 million members throughout the US. It also administers managed care plans for other government programs, including Medicaid plans in Florida and Puerto Rico and TRICARE (for military personnel) in the South. Additionally, Humana offers commercial health plans and specialty (life, dental, and vision) coverage; it also provides health management services and operates outpatient care clinics. All told, it covers more than 21 million members in the US.

Operations

Humana operates through three primary segments: Retail, Group, and Healthcare Services.

Some 60% of Humana's sales come from government program (primarily Medicare) premiums, which are sold through the Retail segment (which brings in about half of revenues). That segment also provides some commercial individual health plans (including HMOs and PPOs) and includes the company's specialty benefits unit, which provides dental, vision, life, and third-party administration service. New to the group are a collection of contracts with states to provide Medicaid, dual-eligible, and long-term support services benefits as well as its contracts with the Centers for Medicaid and Medicare Services (CMS).

Humana's Healthcare Services segment accounts for some 30% of sales and provides wellness programs that encourage its members to make healthy lifestyle choices. The division manages prescription drug coverage for its other segments through Humana Pharmacy Solutions, as well as mail-order pharmacy (RightSourceRx) services. The segment also included the Concentra subsidiary, but Humana sold Concentra in mid-2015.

The Group segment (about 10% of sales) sells commercial health plans (including HMOs and PPOs) to corporate accounts on a fully-insured basis or an ASO (administrative services only) basis. This segment also includes health and wellness business HumanaVitality.

Geographic Reach

Humana has expanded the geographic reach of its Medicare plans, and now has at least one Medicare product available in every state in the US, with its largest markets located in the southern and midwestern US (including Florida, Texas, and Kentucky). Florida alone accounted for more than 40% of its total medical centers and administrative offices.

In addition to its headquarters in Louisville, Kentucky, the company has locations for customer service, enrollment, and/or claims processing in Tampa, Florida; Cincinnati, Ohio; San Juan, Puerto Rico; San Antonio, Texas; and Green Bay, Wisconsin.

Sales and Marketing

Humana markets its products through television and radio ads, the internet, telemarketing, and direct mailings. It employs some 1,500 sales representatives and around 1,300 telemarketing representatives to sell its retail products; additionally, the company markets its individual Medicare products through an alliance with Wal-Mart. Humana uses licensed independent brokers, independent agents, and employees to sell its group products.

Health and supplemental coverage is offered to individuals, families, service personnel, and veterans.

In 2016, Humana made three-fourths of its total premiums and service earnings from contracts with the federal government.

Financial Performance

Humana's aggressive and creative expansion strategies have led to positive financial growth, but that growth slowed down in 2016. That year, revenue increased less than 1% to $54.4 billion. Although premiums did increase (by 1%), that gain was offset by declines in services revenue and investment income. Services revenue dropped primarily due to the completion of the sale of former subsidiary Concentra in 2015.

Net income fell 52% to $614 million in 2016. This was partially due to the absence of gains on the sale of Concentra.

Cash flow from operations, though, more than doubled to $1.9 billion, due to positive adjustments to net cash provided by operating activities including changes in operating assets and liabilities.

Strategy

Humana's core strategy for growth is to offer quality care through an integrated delivery model that includes wellness and care coordination offerings. It strives for high customer engagement to promote health (and cost savings). For example, it works closely with primary care providers to encourage members to maintain their health and prevent costly medical issues. It also focuses on technology and predictive analytics to improve its members' customer experience and boost its own operations. Over time, the company has become a top Medicare plan provider by aggressively pursuing growth within its government operations, including covering dual-eligible Medicare/Medicaid members and participating in state health insurance exchanges. It is ambitious in its retail marketing efforts to sign up Medicare recipients for its Medicare Advantage and Part D prescription plans. Humana is also focused on reaching the fast-growing segment of the population that has one or more chronic conditions, particularly aging persons or those who are already covered by Medicare Advantage plans.

Humana is also focused on growing its commercial business by introducing new products, expanding its specialty lines including dental and vision, and adopting new technologies. The company actively pursues strategic mergers, acquisitions, alliances, and investment opportunities to broaden its operations. After experiencing sharp reductions in the number of Medicare prescription drug plan (PDP) members due to competition, Humana has found renewed success by partnering with Wal-Mart to offer low-premium PDPs. In addition, Humana partners with Medicaid provider CareSource to provide services to dual-eligibility Medicare/Medicaid members.

The company sold subsidiary Concentra for $1.1 billion in 2015. Although it acquired the unit in 2010 to provide additional care benefits to its members, management ultimately decided that Concentra's focus on providing occupational injury care didn't fully align with its own strategy for growth.

In 2017, a federal judge put the kibosh on a planned $34 billion acquisition of Humana by larger rival Aetna. The deal was blocked on antitrust grounds; Humana received a $1 billion breakup fee from Aetna.

Due to programmatic factors with the Affordable Care Act (ACA), including what Humana deems a persistently unbalanced risk pool, the company will, starting in 2018, no longer offer ACA health care exchange policies. (Some have decried the move as a response to the government's blocking of Humana's merger with Aetna.)

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Humana Insurance Company

1100 Employers Blvd
Green Bay, WI 54344-0002
Phone: 1 (502) 580-1000
Fax: 1 (920) 337-5432

Stats

  • Employer Type: Public
  • Actuarial Director: Thomas Butzen
  • Actuarial Director: Thomas Ciha
  • Chief Learning Officer Vice President Director Manager of Corporate Education: Brenda Roubal
  • Employees: 2,200

Major Office Locations

  • Green Bay, WI