Humana 2002 Annual Report Download - page 10

Strategy
Our business strategy centers on increasing Commercial segment profitability while maintaining our
existing strength in the Government segment. Our strategy to increase Commercial segment profitability focuses
on providing solutions for employers to the rising cost of health care through the use of innovative and
consumer-centric product designs which are supported by service excellence and industry-leading electronic
capabilities, including education, tools and technologies provided primarily through the Internet. The intent of
our Commercial segment strategy is to enable us to further penetrate high potential commercial markets and to
transform the traditional consumer experience for both employers and members to result in a high degree of
consumer satisfaction, loyalty and brand awareness. We are in the process of reducing our administrative cost
structure primarily to support our Commercial strategy.
Our Products
The following table presents our segment membership, premiums and ASO fees by product for the year
ended December 31, 2002:
Medical
Membership
Specialty
Membership Premiums ASO Fees
Total
Premiums and
ASO Fees
Percent of
Total
Premiums
and ASO
Fees
Commercial:
Fully insured:
HMO .................. 1,147,100 — $ 2,610,926 $ — $ 2,610,926 23.4%
PPO ................... 1,193,200 — 2,888,107 — 2,888,107 25.8%
Totalfullyinsured ...... 2,340,300 — 5,499,033 — 5,499,033 49.2%
Administrative services only . . 652,200 — — 103,203 103,203 0.9%
Specialty ................. — 1,640,000 337,295 — 337,295 3.1%
Total Commercial ........ 2,992,500 1,640,000 5,836,328 103,203 5,939,531 53.2%
Government:
Medicare+Choice .......... 344,100 — 2,629,597 — 2,629,597 23.5%
Medicaid ................. 506,000 — 462,998 — 462,998 4.1%
TRICARE ................ 1,755,800 — 2,001,474 — 2,001,474 17.9%
TRICARE ASO ............ 1,048,700 — — 141,193 141,193 1.3%
TotalGovernment ........ 3,654,600 — 5,094,069 141,193 5,235,262 46.8%
Total................... 6,647,100 1,640,000 $10,930,397 $244,396 $11,174,793 100.0%
Our Products Marketed to Commercial Segment Members
New Generation of Products
We have developed a range of innovative products that we believe will be a solution for employers who are
consistently facing double-digit premium increases as medical costs also continue to rise at that same level. Our
new generation of products encompass more choices for the individual consumer, transparency of provider costs,
guidance when consumers need it most, and benefit designs that engage consumers in the financial implications
of the choices they make with respect to their health care. Innovative tools and technology are available to assist
consumers with these decisions, including trade-offs between higher premiums and point-of-service costs at the
time consumers choose their plans, and ways in which the consumers can maximize their individual benefits at
the point they use their plans. These products are sold to employers with Humana as the sole carrier, but are
available as either a fully insured or self-funded option to employers.
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