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Humana: Obamacare Exchange Enrollment ‘More Adverse Than Previously Expected’

By Avik Roy, Forbes Staff

Humana’s corporate headquarters in Louisville, Kentucky. (Photo credit: Wikipedia)

Humana’s corporate headquarters in Louisville, Kentucky. (Photo credit: Wikipedia)

1/10/2014 – On January 9, health insurance bellwether Humana formally announced something that industry observers have long suspected: that healthy and young people don’t think Obamacare’s insurance plans are a good deal for them. Those people, Humana indicated, are choosing to stay on their previous health plans, where allowed, instead of participating in the Obamacare exchanges. As a result, Humana “now expects the risk mix of members enrolling through the health insurance exchanges to be more adverse than previously expected.” The question now is: will taxpayers have to pick up the bill for the Obama administration’s last-minute changes to the law?

Losses on exchanges cushioned by outperformance elsewhere

Humana’s answer to this question, thus far, appears to be: not yet. The insurer “is evaluating the effects” of President Obama’s chaotic decision to allow some insurers in some states to continue old plans, and exempt some Americans from the individual mandate. But for now, Humana is “reaffirming its previous 2014 earnings guidance of $7.25 to $7.75 per diluted common share.” But that’s because Humana’s losses on the exchanges are being offset by good performance in the company’s other businesses.

Private insurers have diverged in their approach to the Obamacare exchanges. The largely non-profit Blue Cross Blue Shield plans have involved themselves with gusto, hoping that they can make up for any near-term losses by gaining a first-mover advantage and enrolling the initial crop of participants. The for-profit insurers have been more careful, participating only in states where they feel they can deliver a cost-efficient product.

Humana has been one of the for-profit players, along with Aetna, that has been most gung-ho about participating in the exchanges. “The exchanges probably are a good thing,” Humana CEO Bruce Broussard told me in an October interview. “It’s expanding coverage for people, and we think that in the long run it will be the right thing to do. In the short run, it’s got some bumps, and the industry and the government expected that. But we are focused on fixing those bumps, and to work with the government to make it both a good experience [while] driving down health care costs and improving the quality.”

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Source: http://www.forbes.com/sites/theapothecary/2014/01/10/humana-obamacare-exchange-enrollment-more-adverse-than-previously-expected/?utm_source=followingweekly&utm_medium=email&utm_campaign=20140113#!

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