Humana Turning Around But On A Bumpy Road
Humana reported Q4 2025 results today. While the Medicare Advantage (MA) insurer is making inroads, the road remains bumpy. During the fourth quarter, Humana’s net loss grew 14.9% to $796 million. Revenue rose 11.3% to $32.5 billion. For the full year, net income declined 1.6% to $1.2 billion and revenue increased 10.1% to $129.7 billion. Humana reported an medical loss ratio (MLR) of 93% in the fourth quarter and 90.2% in 2025.
Humana ended 2025 with 5.8 million MA members, a 6.3% decline since 2024. It expects enrollment to be 25% higher this year. This is in contrast to most of the other large national plans. Humana says earnings from individual MA plans will dip just below breakeven this year. Humana stock tumbled because investors fear benefits are too high for 2026, driving enrollment. This could impact margins in 2026, which investors see as a lack of operational controls necessary to meet expectations.
About 45% of Humana’s renewing MA members and 30% of its new enrollees chose plans that will not earn Star Ratings program quality bonuses. The cataclysmic drop in Star ratings has cost Humana $3.5 billion in 2026.
Humana CEO Jim Rechtin sounded conciliatory on the flat rates expected in 2027. He acknowledged the fiscal pressures on Medicare but that rates will be inadequate. He said Humana would adapt if the rate remained flat after lobbying.
Additional articles: https://www.modernhealthcare.com/insurance/mh-humana-medicare-advantage-enrollment-2026/ and https://www.beckerspayer.com/financial/humana-posts-796m-loss-in-q4/ and https://www.modernhealthcare.com/insurance/mh-humana-earnings-medicare-advantage/
(Some articles may require a subscription.)
#medicareadvantage #humana #margins
Federal Deficit and Debt to Suge
The federal deficit and national debt will surge by trillions of dollars over the next decade, according to new outyear projections from the nonpartisan Congressional Budget Office (CBO). The CBO says the U.S. budget deficit will reach $1.9 trillion in fiscal year 2026, which is 5.8 percent of GDP and roughly consistent with fiscal 2025. The deficit is expected to reach $3.1 trillion, or 6.7 percent of GDP, by 2036. Debt as a percentage of GDP will rise from 99% to 120% in the next decade and 175% of GDP within 30 years.
The changes are driven in large measure by the One Big Beautiful Bill Act (OBBBA) tax cuts, higher tariffs, and lower immigration rates. The OBBBA will increase the deficit by $4.7 trillion between 2026 and 2035.
#congress #trump #budget #spending
https://thehill.com/business/5733818-cbo-federal-deficit-debt-projections/?tbref=hp
Rural Hospitals At Risk
The Rural Health Transformation Program’s (RHTP’s) $50 billion injection will certainly help rural healthcare but a new report says it likely comes too late to reverse years of deterioration that have left hundreds of hospitals in jeopardy.
Healthcare advisory Chartis warned that 41.2% of all rural hospitals are operating in the red, and 417 are “vulnerable to closure.”
#ruralhealthcare #hospitals
PBM Legislation’s Fallout
A good article on the potential fallout of the recent pharmacy benefits manager (PBM) reforms. The article says the big three PBMs – about 80% of the market — have adapted their business models in the past several years due to political scrutiny, customer dissatisfaction, and transparent PBM competitors. The big 3 lost a combined 20 employer contracts to smaller PBMs this year. The big PBMs are moving toward transparent offerings.
Among the reforms, PBMs will no longer be permitted to set payments as a percentage of drug prices under Medicare, must fully pass through rebates, and will have to disclose more information about themselves, their affiliated group purchasing organizations (GPOs), and other business partners.
#pbms #drugpricing
https://www.modernhealthcare.com/politics-regulation/mh-pbm-consolidated-appropriations-act-2026
Tenet Projects ACA Revenue Loss
Dallas-based Tenet Healthcare expects a 20% reduction in Exchange enrollment this year due to the sunset of enhanced subsidies. The Exchange loss will have big impact. The company is projecting adjusted EBITDA of up to $4.8 billion in 2026, with up to $2.6 billion of that stemming from its hospital business. Last year, Tenet reported $4.6 billion in adjusted EBITDA, compared to $4 billion in 2024.
#hospitals #margins
https://www.beckershospitalreview.com/finance/tenet-expects-20-aca-enrollment-drop
Did Joint Replacement Reform Pilot Save?
A great Becker’s article analyzing the Comprehensive Care for Joint Replacement (CJR) model. After a decade, studies show mixed results on the program. The CJR required hospitals in 67 randomly selected metro areas to take financial accountability for the full 90-day episode of hip and knee replacements, putting post-acute care, surgeon behavior, implant costs, and readmissions into a single performance frame. Its successor, the Transforming Episode Accountability Model (TEAM), is now live in hospitals across the country.
But did the bundled payments work at scale? The seventh annual report published in December, found that CJR generated an estimated $112.7 million in Medicare savings across performance years six and seven, or roughly $1,142 per episode. That beat the overall losses earlier. But CMS says the model “did not lead to changes in quality of care” on claims-based measures of readmissions, emergency department use, mortality, and complications. Other researchers say savings and impacts have been small — roughly $50 in savings per episode and 0.04 additional healthy days at home per patient. One issue, hospitals did not see reductions, which were largely on post-acute care, primarily skilled nursing facility use and inpatient rehabilitation.
A University of Florida study published in 2023 found that its CJR participation saved Medicare an estimated $16.4 million over five years while dramatically improving quality. Length of stay dropped 56%, readmissions fell from 17.7% to 5.1%, and complications decreased from 6.5% to 2%. Ironically, the hospital was penalized more than $300,000 at the end of its participation. The authors attributed the penalty to benchmark changes and the removal of healthier patients from the CJR-eligible pool as joint replacements moved to outpatient settings. Benchmark setting may have been imperfect over time. By 2019, 87.9% of safety-net hospitals mandated to participate in CJR were penalized, compared to 52.8% of all mandatory participants.
#hospitals #quality #healthcarereform #bundledpayments
Hospital Spending Drove Overall Healthcare Growth
A new healthcare policy group KFF analysis of national healthcare expenditure finds that hospital spending helped drive the major increase in spending over time.
Overall healthcare expenditures increased by $692 billion between 2022 and 2024, from $4.6 trillion to $5.3 trillion. Spending on hospital care accounted for $277 billion of spending growth, or 40% of the total increase in national health spending, over that time.
Hospital care accounted for nearly one-third of overall expenditures in 2024. The growth in hospital spending in 2023 and 2024 was primarily due to a rebound in nonprice factors, such as the use and intensity of services, post COVID.
#healthcare #spending #hospitals
— Marc S. Ryan
