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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 approximately 6 million members throughout the US. It also administers managed care plans for other government programs, including Medicaid plans in Florida and Texas 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 20 million members in the US.

Operations

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

The Retail segment brings in about 60% of Humana's revenue. Most of its sales come from government program premiums -- primarily Medicare premiums. The segment also provides some commercial individual health plans including HMOs and PPOs. The group also holds 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 revenue. It provides wellness programs that encourage its members to make healthy lifestyle choices. The segment manages prescription drug coverage for its other segments through Humana Pharmacy Solutions. 

The Group and Specialty segment accounts for about 10% of revenue. It sells commercial health plans (including HMOs and PPOs) to corporate accounts on a fully-insured basis or an ASO (administrative services only) basis. Specialty benefits including dental, vision, and life insurance are marketed to individuals and employers, as well.

The group's former Individual Commercial segment consisted of its individual commercial fully-insured medical health insurance operations, which it exited in early 2018.

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. Its largest markets are located in the southern and midwestern US, including Florida, Texas, and Kentucky. Florida alone accounts for more than 45% 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 1,400 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 communities at large.

Humana makes about 80% 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 over the past five years, but that growth slowed down recently. Revenue increased less than 1% in 2016 and fell 1% in 2017. Net income has been climbing, but, like revenue, it has had a couple of down years, largely due to divestitures.

In 2018, revenue increased 60% to $56.9 billion. That gain was largely driven by growth in the Retail segment, which saw 8% growth in individual and group Medicare Advantage membership. Additionally, services revenue increased 48% that year, including an 80% rise for the Healthcare Services segment.

Net income fell 31% to $1.7 billion in 2018. Several factors played into the decline, including the company's exit from the individual commercial business, increased operating expenses, and charges associated with workforce reductions.

The company ended 2018 with $2.3 billion in net cash, $1.7 billion less than it had at the end of 2017. Operating activities provided $2.2 billion while investing activities used $3.1 billion and financing activities used another $785 million.

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. 

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 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 focused on growing its commercial business by introducing new products, expanding its specialty lines including dental and vision, and adopting new technologies. 

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 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.)

Mergers and Acquisitions

In mid-2018, Humana partnered with investment firms TPG Capital and Welsh, Carson, Anderson & Stowe to acquire Kentucky-based Kindred Healthcare for $4.1 billion. After the purchase, Humana took a 40% stake in Kindred at Home, Kindred's home health, hospice, and community care operations. It holds the right to acquire the rest of Kindred at Home over time.

Company Background

David A. Jones, Sr., founded Humana in 1961 as a nursing home firm named Extendicare. The company moved out of the nursing home business and into the hospital business in 1972. It was renamed Humana in 1974.

Humana entered the insurance business in the 1980s and divested its hospital operations the following decade.

Humana Insurance Company

1100 EMPLOYERS BLVD
Green Bay, WI 54344-0002
Phone: 1 (502) 580-1000

Stats

Employer Type: Privately Owned
Director: Thomas Butzen
Director: Neal Luitjens
Chief Learning Officer Vice President Director Manager of Corporate Education: Brenda Roubal
Employees (This Location): 1,784
Employees (All Locations): 2,200

Major Office Locations

Green Bay, WI