Humana Inc. announced its intention to exit its Employer Group Commercial Medical Products business, which includes all fully insured, self-funded, and federal employee health benefit medical plans.
The move follows a strategic review that determined the business was no longer positioned to sustainably meet the needs of customers or support Humana’s long-term strategic plans.
The exit will take place in stages over the next 18 to 24 months.
According to Humana CEO Bruce Broussard, the move will allow the company to focus on government-funded programs and specialty businesses.
Humana has long been primarily a Medicare insurer, with approximately 5.1 million members at the end of 2022 and a projected increase of more than 775,000 individual enrollees in 2023. CenterWell, the company’s expanding healthcare unit that includes extensive home-health operations and primary-care clinics, has received increased attention. Humana’s employer business shrank to approximately 986,000 in 2018, down from 1.17 million at the end of 2021.
Humana’s decision to exit the employer business completely reflects an extreme version of the direction that the majority of the insurance industry is taking, as companies focus more on government-backed products, particularly the private Medicare Advantage plans. Medicare Advantage now covers roughly half of all Medicare beneficiaries, and the business is expanding rapidly as baby boomers reach eligibility. After UnitedHealth Group Inc., Humana is the second-largest Medicare Advantage insurer.
According to a 2021 Kaiser Family Foundation analysis, Medicare Advantage provided insurers with higher gross margins than employer plans, as measured by the difference between premiums and the cost of healthcare claims. According to analysts, insurers can make more money on Medicare Advantage if they own doctor groups that care for their patients.