Humana Shares Tumble as Medicare Advantage Costs Exceed Expectations

Louisville, Kentucky – Humana Inc. faced a significant drop in its shares after announcing that it was grappling with higher care costs from its Medicare Advantage customers. The health insurer saw its shares plummet by 13% before the market opened, causing a ripple effect on other insurers as well.

The unexpected surge in care costs was attributed to the fact that Medicare Advantage patients used more inpatient care than anticipated in November and December. Additionally, there was an increase in non-hospital care, such as doctor visits and outpatient surgeries. This unexpected rise in costs has forced Humana to revise its profit expectations, with adjusted earnings for the previous year expected to total about $26.09 per share, falling short of the Wall Street expectations of $28.29 per share.

Moreover, Humana also lowered its enrollment growth expectations for the new year, with less than 2% growth expected from its Medicare Advantage business. The company cited fewer new customers during the annual enrollment window as the reason for this adjustment.

To add to this, Humana will now report its fourth-quarter earnings on January 25, a change from the initial date of February 5. The impact of Humana’s announcements was also seen in the stock market, with UnitedHealth Group Inc. and Elevance Inc. experiencing drops of more than 4% and 5% respectively.

The challenges faced by Humana are reflective of the broader issues being encountered by insurers dealing with the Medicare Advantage patient population. The lingering effects of the COVID-19 pandemic have prompted patients to return to healthcare facilities for postponed treatments and check-ups, leading to higher-than-expected costs for insurers.

It remains to be seen how Humana will navigate these challenges and implement strategies to mitigate the impact of the unexpected surge in care costs from its Medicare Advantage customers.