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What Does Humana Expect of Its Group & Specialty Segment in 2019?

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Group & Specialty segment

In its first-quarter earnings press release, Humana (HUM) guided for Group & Specialty segment earnings of $300 million–$350 million. The company also guided for a YoY (year-over-year) loss of 60,000–80,000 group commercial memberships in 2019, an improvement from the previous projection of 80,000–100,000. The company expects a core medical cost trend of 6% +/- 50 basis points for its Group & Specialty segment in 2019.

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According to its first-quarter earnings conference call, Humana’s level-funded ASO (administrative services only) plans designed for smaller groups have been seeing stronger-than-expected uptake in 2019. While this trend has helped reduce the expected YoY deterioration in its group commercial memberships in 2019, it’s also resulted in a modest decline in community rated plan memberships as healthier members have shifted away from these plans.

Key trends

In the first quarter, Humana reported 958,200 total memberships for group fully-insured commercial plans, a YoY fall of 11% and a sequential fall of 5%. According to its first-quarter earnings press release, this is attributable to certain smaller accounts shifting to level-funded ASO products and to the loss of larger accounts to the competition. At the end of the first quarter, smaller accounts accounted for 61% of members enrolled in the company’s group fully-insured commercial plans, lower than their 63% share at the end of the first quarter of 2018.

In the first quarter, Humana reported 478,600 memberships for Group ASO commercial plans, a YoY increase of 6% and a sequential fall of 1%. While small accounts have been moving to this product, there has been a loss of certain large accounts in the segment due to competitive pressures.

In the first quarter, Humana reported a membership of 5.94 million for military services plans under the TRICARE East Region contract, YoY and sequential increases of less than 1%.

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