Humana warns of higher medical costs as patients use insurance more often
Health insurers are feeling the pain as patients are getting treated at higher rates than expected.
Why it matters: The more people use their insurance plans, the lower the profits for the insurers and, typically, the higher prices are for people.
Driving the news: In a surprise announcement Thursday, Humana said its Medicare Advantage costs jumped after "higher than anticipated inpatient utilization" in November and December, meaning formal hospital admissions — and that the company expects the higher usage to continue.
- The insurer also reported jumps in non-inpatient trends, predominantly in the categories of physician, outpatient surgeries and supplemental benefits," such as dental and vision.
- As a result, the share of premiums it spent on medical care in the fourth quarter was 91.4%, up from a projected 89.5%, which meant less to pad the bottom line.
Meanwhile, the company lowered expectations for individual Medicare Advantage members in 2024 to just 1.8%.
The impact: Humana's stock was down 11% in early-afternoon trading, wiping several billion dollars off of its market valuation.
- "The company's profit outlook through 2024 may wind up being weaker than previously anticipated," Morningstar analyst Julie Utterback wrote in a research note.
The big picture: Insurers have said that seniors, in particular, are catching up on elective procedures that were postponed during the pandemic.
- Insurance giant UnitedHealth on Friday reported its own jump in utilization rates.
What we're watching: These trends could lead to higher premiums.
- "Humana believes the emerging trends are impacting the industry broadly and anticipates the trends will be contemplated in the 2025 Medicare Advantage pricing cycle," the company said in a statement.