Louisville, Ky.-based Humana Inc. will discontinue its individual major medical insurance plans in Wisconsin in 2017.
Company spokesperson Mark Mathis said Humana has encountered “persistent issues” over the past three years that have made it difficult to offer individual plans in some markets, but did not explain in detail what those issues were.
“Humana has learned a great deal from our experience in the individual insurance market over the past three years,” said Humana spokesperson Mark Mathis in an email Wednesday afternoon. “There are a number of persistent issues that hinder our ability to offer affordable, high quality and attractive individual insurance products in some markets; as a result, Humana‘s 2017 filings include a number of changes for the individual insurance market. Among those changes, Humana has submitted a filing to discontinue individual major medical insurance plans in Wisconsin.”
A letter sent by a Humana employee to state Insurance Commissioner Ted Nickel announced the company’s decision.
There are currently 6,639 people in the state enrolled in Humana’s individual medical plans, a relatively small number considering around 240,000 Wisconsinites enrolled in individual private plans through the Affordable Care Act exchange during the 2016 open enrollment period.
But insurance broker Jim Mueller said for those enrolled in Humana individual plans, the decision could have large consequences.
“It’s a big deal, especially if you’re sick or receiving treatment, because you can’t replace the policy with the same network,” Mueller said.
A person enrolled in a Humana individual plan who is receiving ongoing treatment for a certain disease or condition may be forced to switch hospitals and physicians if the system isn’t part of their new plan’s network.
Todd Catlin, owner of Transition Health Benefits, an independent insurance brokerage in Brookfield, said Humana’s individual plans in Wisconsin struck him as unusual because they covered a wider network of hospital systems than traditional HMOs which typically only offer coverage at specific systems.
If existing Humana customers are forced to switch to plans that include smaller networks, it could complicate their medical care.
“We do not take these changes lightly,” Mathis said. “We remain focused on our members’ health and well-being, and we will continue to strive to avoid unnecessary coverage disruption wherever possible.”
Coverage for those currently enrolled in Humana’s individual medical plans will end on Dec. 31.
The individual plans Humana is ending in Wisconsin were not offered on the ACA exchange. But Mueller said Humana likely saw enrollment in its individual plans decline due to increased competition from the ACA exchange.
“We call that the death cycle,” Mueller said. “When you lose business, you’re never going to go anywhere.”
When customers leave insurance plans at a faster rate than new ones are signing up, he explained, insurance companies are still on the hook for claims filed by customers months before who may have already left their coverage. But without premiums coming in from new customers to help pay those claims, an insurer’s losses on that plan will consistently increase over time.
Humana reported last week its profits fell 46 percent in the first quarter of 2016. The Wall Street Journal reported the fall was likely caused by costs related to its pending merger with Aetna as well as a 21 percent drop in enrollment in its commercial plans.
Mueller said Humana’s core business is its Medicare Advantage plan, which saw an increase in enrollment of 4.5 percent to 2.8 million in the first quarter of this year.