Humana 2015 Annual Report Download - page 61

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Enrollment
• Individual Medicare Advantage membership increased 325,500 members, or 13.4%, from December 31, 2014
to December 31, 2015 reflecting net membership additions, particularly for our HMO offerings, for the 2015
plan year.
• Group Medicare Advantage membership decreased 5,600 members, or 1.1%, from December 31, 2014 to
December 31, 2015.
• Medicare stand-alone PDP membership increased 563,900 members, or 14.1%, from December 31, 2014 to
December 31, 2015 reflecting net membership additions, primarily for our Humana-Walmart plan offering,
for the 2015 plan year.
• Individual commercial medical membership decreased 90,400 members, or 7.9%, from December 31, 2014
to December 31, 2015 primarily reflecting the loss of approximately 150,000 members due to termination by
CMS for lack of proper eligibility documentation from the member as well as the loss of members who had
subscribed to plans that were not compliant with the Health Care Reform Law. These declines were partially
offset by an increase in membership in plans that are compliant with the Health Care Reform Law, primarily
off-exchange.
• State-based Medicaid membership increased 56,900 members, or 18.0%, from December 31, 2014 to
December 31, 2015 primarily driven by the addition of members under our Florida Medicaid contract.
• Individual specialty membership decreased 12,700 members, or 1.1%, from December 31, 2014 to
December 31, 2015 primarily driven by a membership decline in supplemental health and financial protection
product and vision offerings.
Premiums revenue
• Retail segment premiums increased $6.4 billion, or 16.1%, from 2014 to 2015 primarily due to membership
growth across our Medicare Advantage, state-based Medicaid, and Medicare stand-alone PDP lines of business,
as well as a heavier percentage of individual commercial medical business in higher premium plans compliant
with the Health Care Reform Law. Average Medicare Advantage membership increased 11.8% in 2015.
Benefits expense
• The Retail segment benefit ratio of 86.7% for 2015 increased 180 basis points from 2014 primarily due to
higher than expected medical costs as compared to the assumptions used in our pricing, the recognition of a
premium deficiency reserve in the fourth quarter of 2015 for certain of our individual commercial medical
products for the 2016 coverage year, and unfavorable year-over-year comparisons of prior-period medical
claims reserve development as discussed below. In addition, the increase reflects higher benefit ratios associated
with a greater number of members from state-based contracts and the impact of the change in estimate for the
2014 net 3Rs receivables in 2015. These items were partially offset by the impact of the increase in the health
insurance industry fee included in the pricing of our products. In addition, the 2015 period was favorably
impacted by the release of reserves for future policy benefits as individual commercial medical members
transitioned to plans compliant with the Health Care Reform Law.
We experienced higher than expected medical costs as compared to the assumptions used in our pricing for
2015 primarily due to lower-than-expected 2015 Medicare Advantage financial claim recovery levels and
lower-than-anticipated reductions in inpatient admissions. In addition, medical claims associated with certain
individual commercial medical products, in particular products compliant with the Health Care Reform Law,
exceeded the assumptions used when we set pricing for 2015. We took a number of actions in 2015 to improve
the profitability of our individual commercial medical business in 2016. These actions were subject to
regulatory restrictions in certain geographies and included premium increases for the 2016 coverage year
related generally to the first half of 2015 claims experience, the discontinuation of certain products as well as
exit of certain markets for 2016, network improvements, enhancements to claims and clinical processes and