Humana 2007 Annual Report Download - page 7

5Annual Report 2007
Consistent with our long-standing approach to
Medicare as a retail consumer business, we prefer
individual sales in any event – they are more
predictable, and they allow us to present our
value proposition directly to the buyer.
We remain confi dent with our forecast for
net Medicare Advantage sales of 200,000 to
250,000 for 2008, signifi cantly higher than in
2007, with 65 to 70 percent of this total now
anticipated to be effective by April 1.
With respect to the Commercial sales
environment, our membership forecasts
continue to refl ect strong pricing discipline. The
Commercial group-sales environment is still very
competitive, with the most heated competition
in large groups and national accounts.
Consequently, most of our group sales to new
customers have come in smaller case sizes. We
anticipate strong membership growth once again
in 2008 in our Smart family of consumer-focused
product offerings.
As we analyze the current political environment
and the presidential candidates’ various proposals
for health reform, we believe each of the
candidates brings a thoughtful perspective to the
many health care challenges our nation faces. All
of their proposed plans can lead to opportunities
for our sector as a whole and Humana
specifi cally. With respect to Medicare, we have a
long history of working successfully with leaders
of both parties in Congress and the White House.
In addition, we believe the combination of
Humana’s expanding market share, widespread
geographic presence and high levels of program-
wide enrollment, as well as seniors’ satisfaction
with the program nationwide, will allow us to
adjust effectively to any changes in the Medicare
program over the next several years.
Medicare: Rising Popularity of
Network-Based Plans
Turning now to a more detailed look at our
Medicare business, we’re particularly pleased
with the growing interest seniors are showing
in our Medicare HMO and PPO products. In
fact, nearly half of our net enrollment growth in
Medicare Advantage products through January
2008 has come from our PPO offerings.
From a sales distribution perspective, our career
agents continue to account for the vast majority
of our gross sales, contributing approximately
75 percent of the total. The remainder of our
sales come through the Humana and Centers
for Medicare and Medicaid Services (CMS) web
sites and exclusive broker arrangements. We
believe this unique distribution system results in a
higher-quality sales process and ultimately better
membership retention.
Another key factor in membership retention
is the wide variety of value-added services we
offer our Medicare members. This is a logical
outgrowth of our distinguishing approach
to Medicare as a retail consumer business,
even though it is also a government program.
Comprehensive care coordination for our
Medicare members includes such services as case
management, Personal Nurse, wellness initiatives
available through Humana Active Outlook, social
service coordination, home and hospital visits,
cognitive assessments and caregiver training.
These consumer-focused programs, though
relatively new in Medicare Advantage, are already
showing impressive results in terms of what’s
most important to seniors – their health and
well-being. In 2006 (the most recent period for
which full-year results are available), the average
Humana Medicare enrollee spent 1.6 days in the
hospital, as compared to 2.2 days for the average
senior enrolled in original Medicare. The Humana
member’s average annual cost of care was
$6,245 – more than $1,000 less than the
$7,458 spent on the average enrollee in
original Medicare.