October 4, 2023

Humana joins UnitedHealth in flagging cost hit from rising surgeries, ET HealthWorld

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New Delhi: Humana Inc on Friday joined larger health insurer UnitedHealth in warning of a jump in medical costs this year due to higher-than-expected demand for surgeries and other medical procedures.

Health insurers are seeing a rise in payouts as staffing shortages ease at hospitals and older adults covered under Medicare catch up on missed hip and knee replacements as well as other non-urgent surgeries delayed during the pandemic.

“Now with restrictions being lifted and the public health emergency coming to an end officially at a national level, we’re going to see that (surgeries) come back,” said Pavani Rangachari, a professor of healthcare administration and public health at the University of New Haven.

Demand for these procedures is also being fueled by an aging baby boomer population, a bump in life expectancy and a shift towards value-based care where payments are based on health outcomes rather than services provided, she said.

Humana also noted elevated demand for outpatient surgeries and dental services, as well as strong inpatient demand in recent weeks, a trend it said was diverging from historical seasonal patterns.

UnitedHealth had flagged higher costs earlier this week following an increase in surgeries among Medicare-eligible adults, wiping out billions in the market capitalization of health insurers including Humana.

Humana and UnitedHealth are the top providers of Medicare Advantage plans for people aged 65 and over in which private insurers are paid a set rate by the government.

Kentucky-based Humana now expects its medical loss ratio – the percentage of claims paid out compared with premiums collected – at the top end of its full-year projected range of 86.3 per cent to 87.3 per cent .

Still, the company reaffirmed its adjusted earnings forecast of at least $28.25 per share for 2023.

Humana’s shares were down 1.9 per cent in early trading on Friday, while other insurers were marginally lower.

  • Published On Jun 17, 2023 at 07:00 AM IST

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