Humana CEO: We're not coming back to Obamacare
Regardless of the Obamacare overhaul Republicans are pursuing, Humana is out for good, the CEO of the Louisville-based health insurer said Thursday.
LOUISVILLE, Ky. (WDRB) – Regardless of the Obamacare overhaul that Republicans are pursuing, Humana is out for good, the CEO of the Louisville-based health insurer said Thursday.
Speaking at an investor conference, Humana chief executive Bruce Broussard said the company is committed to a plan announced last month to stop selling individual plans in the state-based marketplaces created under the Affordable Care Act.
And once it’s out next year, Humana will not re-enter the market, Broussard said.
“I want to emphasize to the investors – as we think about the future – you won’t see us go in the exchanges … We have planned that exit -- we’ve made the commitment there -- and even if they were to change it to be very viable, we wouldn’t be back in,” Broussard said at the Barclays Global Healthcare Conference in Miami.
Humana said last month that this will be the final year in which the company sells individual Obamacare-compliant plans in 11 states – primarily Tennessee – where it currently covers about 152,000 people.
The company said despite its best efforts to tweak the plans, the risk pool in the exchanges remains “unbalanced” – in other words, there are not enough young and healthy people generating premiums to cover the costs of older and sicker people.
Humana expects to lose about $45 million on the roughly $875 million in premiums the company will take in through Obamacare plans this year, chief financial officer Brian Kane told investors on a Feb. 14 conference call.
Humana’s announced exit from the exchanges came on the same day the company formally broke off its planned sale to rival Aetna after a federal judge granted the Obama administration’s request to block the $37 billion merger on anti-competitive grounds.
At the event Thursday, Broussard said that instead of trying to make money with Obamacare plans, Humana will double-down on Medicare Advantage, its bread-and-butter business.
Under the program, Humana manages the Medicare benefits of about 3.2 million seniors in exchange for fixed payments from the federal government. Medicare Advantage accounted for more than 77 percent of the company’s $46 billion in premiums in 2016.
“Our focus is Medicare Advantage, and anything that will drive Medicare Advantage growth in the future is what we are, and that brand will continue to be reinforced as being a senior-based brand,” Broussard said.
Broussard: employee morale strong after Aetna breakup
Broussard also said the company's 50,000 employees (including 12,500 in Louisville) remain "engaged" and "excited about the future" even after enduring 21 months of uncertainty when the Aetna deal was pending.
Humana recently laid off an unspecified number of employees across the company, though spokespeople said there were no "broad" job reductions in any particular location.
Broussard said a monthly internal survey shows Humana employees have maintained a high level of "engagement" with the company and are "excited about the future."
"We had a constant communication with them and we made a few principles. One principle is transparency, meaning what we knew we would tell them right away and do it on a timely basis and frequency," he said.
Broussard added that "very few" employees left the company during the deal period and the senior leadership remains intact.
He said Humana was well-prepared for the merger to fall apart thanks to contingency plans executives made last summer.
"When the deal did break ... we were ready to go and we were able to execute on it very, very easily," Broussard said. "It was like a standard day for us; it wasn’t something of any kind of drama."
Humana executives said nothing Thursday about the company potentially being a takeover target once again, but they signaled that Humana could be on the hunt for companies to buy.
Kane, who also spoke at the conference, said Humana borrowed $1 billion at low interest rates earlier this week. Even after returning capital to shareholders through a $1.5 billion stock buyback, Kane said Humana will have "very significant capacity to pursue our strategy and look for M&A (merger and acquisition) opportunities."
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