Humana 2015 Annual Report Download - page 71
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63
Change
2014 2013 Dollars Percentage
(in millions)
Premiums and Services Revenue:
Premiums:
Fully-insured commercial group $ 5,339 $ 5,117 $ 222 4.3 %
Group specialty 1,098 1,095 3 0.3 %
Military services 19 25 (6) (24.0)%
Total premiums 6,456 6,237 219 3.5 %
Services 763 735 28 3.8 %
Total premiums and services revenue $ 7,219 $ 6,972 $ 247 3.5 %
Income before income taxes $ 151 $ 240 $ (89) (37.1)%
Benefit ratio 79.5% 77.7% 1.8 %
Operating cost ratio 26.5% 26.5% — %
Pretax Results
• Group segment pretax income decreased $89 million, or 37.1%, to $151 million in 2014 primarily reflecting
higher utilization, mainly due to higher specialty prescription drug costs associated with a new treatment for
Hepatitis C, as well as the continuing impact of transitional policy changes which allowed individuals to remain
in plans not compliant with the Health Care Reform Law.
Enrollment
• Fully-insured commercial group medical membership decreased 1,500 members, or 0.1% from December 31,
2013 as an increase in small group business membership was generally offset by lower membership in large
group accounts. Approximately 65% of our fully-insured commercial group medical membership was in small
group accounts at December 31, 2014 compared to 61% at December 31, 2013.
• Group ASO commercial medical membership decreased 58,500 members, or 5.0%, from December 31, 2013
to December 31, 2014 primarily due to continued pricing discipline in a highly competitive environment for
self-funded accounts.
• Group specialty membership decreased 278,100 members, or 4.1%, from December 31, 2013 to December 31,
2014 primarily due to declines in dental and vision membership related to our planned discontinuance of
certain unprofitable product distribution partnerships.
Premiums revenue
• Group segment premiums increased $219.0 million, or 3.5%, from 2013 to 2014 primarily due to higher fully-
insured commercial group medical premiums per member that more than offset a slight decline in total
membership for this segment.
Benefits expense
• The Group segment benefit ratio increased 180 basis points from 77.7% in 2013 to 79.5% in 2014 primarily
due to higher utilization, mainly due to higher specialty prescription drug costs associated with a new treatment
for Hepatitis C, as well as the continuing impact of transitional policy changes, partially offset by the inclusion
of the health insurance industry fee and other fees mandated by the Health Care Reform Law in our pricing.
• The Group segment’s benefits expense included the beneficial effect of $29 million in favorable prior-year
medical claims reserve development versus $42 million in 2013. This favorable prior-year medical claims
reserve development decreased the Group segment benefit ratio by approximately 40 basis points in 2014
versus approximately 70 basis points in 2013.