Humana 2006 Annual Report Download - page 6

4 Annual Report 2006
Second, we knew seniors wanted to
enroll in the new Medicare options
through a variety of formats, so, in
conjunction with our government partners, we
developed the capacity for e-signatures and
a robust Humana website to facilitate online
enrollment. As it turned out, 38 percent of our
fi rst-year PDP enrollees signed up online.
Knowing that Wal-Mart has an enormous
volume of senior traffi c, we partnered with this
trusted consumer brand – and with other leading
consumer companies like State Farm and USAA –
which served as effective sales distribution
channels throughout the enrollment period.
We knew people with Medicare wanted to be
treated as active, dynamic individuals; thus we
developed a distinguishing series of quality-of-
life programs, including Humana Active Outlook,
a comprehensive menu of health, wellness and
healthy lifestyle offerings; SilverSneakers, which
provides free health club memberships; and
PositScience, a computer-based brain fi tness
program promoting mental acuity.
Third, we knew that unparalleled service
in the fi rst year would be crucial to
establishing long-term relationships
with our new senior membership. We
therefore invested accordingly and, as mentioned
previously, earned the number one PDP service
company ranking in Florida and number two
in Texas – both states with large Medicare
populations – from J.D. Power and Company.
Finally and most importantly, we knew
that seniors would ultimately measure
the success of our PDP offerings by their
ability to save money on prescription
drugs. They have. Seniors across the nation are
saving billions of dollars in drug costs, and the
program is costing the government less than
anticipated – about $113 billion less over the
next ten years, according to a recent report by
actuaries from the Centers for Medicare and
Medicaid Services.
As we entered the 2007 PDP selling season
in late 2006, we believed our senior population
would be extremely loyal to Humana, and
they have been. Our objective was to
maintain our PDP enrollment of approximately
3.5 million members throughout this year.
January enrollment results confi rm that we
are now on track to exceed this, as we expect
to have approximately 3.6 million members
by December 31.
We’re also pleased with the way our Medicare
Advantage sales season has unfolded so far.
Sales to date have been robust, coming in
slightly above our expectations, while attrition
is within our forecasted range. We expect
to fi nish 2007 with between 1,130,000 and
1,200,000 Medicare Advantage members. As our
relationship with our PDP members strengthens
over time, we believe those members will
become increasingly interested in our Medicare
Advantage value proposition, which bodes well
for future Medicare Advantage growth.
Behind these results is a unique,
integrated Medicare model that
is in tune with seniors’ needs.
While Medicare is a government
program, it is in our view a retail
consumer business.
Medicare Advantage Membership (in thousands)
0
200
400
600
800
1,200
1,000
Dec
2004 Dec 2005 Dec 2006
HMO PPO PFFS