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Key drivers of Humana’s retail health plans in 4Q 2014

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Retail segment

The private health insurance industry (XLV) in the US is gradually shifting from a group insurance model to a retail insurance model. Retail insurance comprises individual Medicare advantage and Medicare stand-alone prescription drug enrollments as well as Medicaid and individual commercial plan enrollments.

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Individual MA growth

Humana registered an increase of 18.2% in individual MA (Medicare advantage) enrollments year-over-year from 2.0 million in the fourth quarter of 2013 to 2.4 million in the fourth quarter of 2014. To attract new enrollees, the company has focused on rolling out new HMO (Health Maintenance Organization) offerings in 2014. Humana has also entered into contracts with Virginia and Illinois to enter the new market of dual-eligibles.

The dual-eligible population in the US, reported in the Medicare segment, comprises people who are both Medicare and Medicaid beneficiaries. Five states in the US—California, Virginia, Illinois, Ohio, and Massachusetts—have started Commonwealth Coordinated Care, a three-year pilot program, to treat this population. Humana managed to attract 18,300 dual-eligible enrollments in the fourth quarter of 2014.

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Prescription drug plans

Prescription drug plans, or PDPs, are additional health insurance plans provided to Medicare beneficiaries for prescription drug expenses. Humana’s success with PDPs is largely due to the success of the low-priced Humana-Walmart offering. For more information on this offering, please see Humana networks with Walmart mean lower member premiums.

Humana’s PDP (Medicare stand-alone prescription drug plan) enrollments increased by 21.9%, from 3.3 million in fourth-quarter 2013 to 4.0 million in fourth-quarter 2014.

Individual commercial

Humana sells individual health insurance plans on public and private exchanges under the brand name HumanaOne. HumanaOne enrollments increased by 100%, from 0.5 million in fourth-quarter 2013 to 1.0 million in fourth-quarter 2014. These enrollments included on-exchange and off-exchange sales.

State-based Medicaid

Humana, UnitedHealth Group (UNH), and Wellcare Health Plans (WCG) stood out, while Molina Healthcare and Aetna (AET) failed to obtain contracts for Florida’s Medicaid business.

Humana (HUM) saw a huge spike in Medicaid enrollments at 249.1%, from 0.08 million in fourth-quarter 2013 to 0.21 million in fourth-quarter 2014. This is due mainly to Florida’s decision to shift its Medicaid population in order to manage Medicaid plans post–October 2014, selecting Humana to provide these services to the state.

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