Humana, Inc.

Company information

• Date founded: 1961
• Industry: Managed Health Insurance
• Corporate headquarters: Louisville, Kentucky
• Type: Public

Overview

Humana, Inc. is an American health insurance provider. A for-profit public company, Humana offers consumer health plans for individuals, employer groups, and products serving the Medicare market for those over the age of sixty-five or who are disabled. In addition, the company offers supplemental plans to cover vision and dental services as well as financial services related to health care needs. Humana also operates a health and well-being division that offers such services as pharmaceuticals, home care, and other specialized health-related services. The Kentucky-based company ranks in the top five by revenue among health insurers in the United States and is in the top fifty on the Fortune 500 list.

History

The company that became Humana started out in 1961 as a Louisville, Kentucky, nursing home company. It was founded by two lawyers, David A. Jones Sr. and Wendell Cherry, who named the enterprise Extendicare Inc. By 1968, it was the largest nursing home company in America. That same year, the company acquired the first of several hospitals.

By 1972, the company sold off the nursing homes in favor of focusing on hospitals. It soon became the third-largest hospital chain in the nation. In 1974, Extendicare changed its name to Humana in a move to soften its image and place its emphasis on human care. Four years later, it purchased the second-largest hospital chain, American Medicorp. The move doubled the number of Humana-held hospitals. In 1982, just ten years after changing its focus to hospitals, Humana owned and operated almost one hundred hospitals in the Southern United States and had become the nation’s largest hospital company.

In 1984, the company expanded from running hospitals to offering health insurance through Humana Health Care Plans. This was prompted by a situation where one of its hospitals in Arizona was dropped from an existing insurance plan. They followed this in 1993 by separating the hospital operation segment of the company into a new entity, Galen Health Care. Galen later merged with Columbia Hospital Corp., which was eventually renamed Columbia/HCA. Also in 1993, Humana entered the military health market when it created a subsidiary, Humana Military Healthcare Services (HMHS). This division received its first government contract in 1995 and continued in operation thereafter.

Once Humana entered the health insurance market, the company followed the model it used when it began operating hospitals and acquired a number of other health insurance companies in Florida and around the country. In 2006, Humana ventured into the Medicare market, selling Medicare supplement products known as Medicare Advantage and Medicare Prescription Drug Plans. Humana also created RightSource, a retail mail-order pharmacy.

The addition of the mail-order pharmacy was the first of several changes that resulted in Humana returning to directly providing health care services. Four years later, in 2010, the company purchased Concerta Inc., a Texas chain that provided physical therapy and urgent care services. Concerta was sold in 2015 to a medical holding corporation.

In 2010, the Patient Protection and Affordable Care Act (PPACA) became law in America. Commonly known as Obama Care, the law implemented certain standards for what health insurance policies must cover and created marketplaces for individuals without access to employer-based plans to purchase health insurance. In 2014, Humana became part of these marketplaces—also known as health insurance exchanges—and aggressively marketed its plans to individual customers in fifteen states.

A large merger between Humana and another insurer, Aetna, was announced in July 2015. The proposal called for Aetna to acquire Humana for $37 billion in cash and stock. At the time, it was the largest merger ever planned in the health insurance market. However, the proposal came under legal scrutiny related to antitrust laws and concerns that it would reduce competition. The proposal was stopped twice by federal judges in 2017, at which point the companies abandoned the effort.

Over the course of its history, Humana also participated in several initiatives related to improving health outcomes for its members and the community at large. In 2005, it partnered with an outside company to improve member health by providing support and financial rewards for exercise and other healthy behaviors. In 2006, Humana partnered with the Centers for Disease Control (CDC) partnered in an effort to create better ways to monitor and address health problems and trends in the general public. The partnership used Humana’s resources and available technology to gather data on the incidences of chronic diseases such as diabetes and hypertension in various populations. The program's intent was to reduce the number of patients affected by these diseases and therefore reduce healthcare costs.

Humana Inc. is a health insurance provider that offers retail individual and group products as well as supplemental and health care services. Its retail health insurance plans include Medicare and Medicare supplements, as well as Medicaid contracts with a number of different states. In addition, Humana offers group insurance to employer groups and the military. It also provides vision and dental insurance, pharmacy services, programs to assist medical providers in operating its clinics, and technical support services such as predictive modeling and informatics. The health plans offered include health management organizations (HMO), preferred provider organizations (PPO), hybrid HMO/PPO plans known as point-of-service (POS), and exclusive provider organizations (EPO).

As of 2023, Humana ranked in the top five insurers in the United States by revenue, which stood at $90 billion. By membership, it ranked fifth, with almost 20 million members in fifty states and a provider network that included over 350,000 participating professionals and 3,000 participating facilities. In addition, Humana offered Medicare services in all fifty states, with Medicare Advantage supplements offered in the majority of American counties. Between 2022 and 2023, Humana’s Medicare Advantage plan grew substantially, adding over 775,000 members. Its mail-order pharmacy benefit for Medicare members was ranked number one in the country by data analytics company J.D. Power. Humana also partnered with Walmart and its in-store pharmacies to provide retail pharmacy services.

Impact

According to Humana’s website, its goal is to transition from a focus on health insurance with aspects of health management to a health management-focused company that also provides health insurance. Because of its large membership in Medicare products, much of its efforts are concentrated on improving health for those aged sixty-five and older. To that end, it has identified five areas of focus: basic or primary health care, medical care in the home, behavioral health care, pharmaceuticals, and social determinants of health. Social determinants are the situations in a person’s life that impact their access to health care and overall health. They include such factors as a person’s social support structure and community, neighborhood and environment, financial/economic stability, and education. In 2019, Humana screened 2.6 million people for factors that could negatively impact their health. During the COVID-19 pandemic, Humana also provided resources to help address the way the pandemic conditions worsened social determinants, such as emotional and mental health support.

Humana has also established product lines or programs to help people with other healthcare needs. These include Humana Healthy Horizons, a state-based Medicaid program that provides benefits for low-income individuals. Through partnerships with a number of states, including Florida, Georgia, Illinois, Kansas, Kentucky, Louisiana, Michigan, Minnesota, Missouri, New York, North and South Carolina, Ohio, Tennessee, Texas, West Virginia, and Wisconsin, Humana Healthy Horizons provides Medicaid Managed Care and Managed Long-Term Services and Support as well as programs for people who qualify for both Medicare and Medicaid.

Other Humana initiatives include partnerships with Volunteers of America to provide treatment and support for substance abuse and neonatal abstinence syndrome (NAS). Neonatal abstinence syndrome refers to the withdrawal symptoms experienced by a newborn infant when the mother was using opioids or other intoxicating substances before birth. The company also worked with Boys and Girls Clubs of America to address food insecurity and related health conditions in young people by funding community gardens and training for developing healthy eating and exercise habits.

In addition, Humana has partnered with several universities that train physicians and other medical personnel. At the University of Florida, the partnership focuses on addressing social issues that impact the health of residents in the Jacksonville and Northern Florida region. At the University of Houston, Humana established the Humana Integrated Health Sciences Institute with an eye towards improving health outcomes and increasing the use of healthcare payment systems that focus on the value provided to the consumer.

Bibliography

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