Humana 2009 Annual Report Download - page 4

Government Segment
Throughout the year, favorable
performance in our Government
Segment – particularly in Medicare –
outweighed the negative effects of
the general economy, the competitive
environment, and the H1N1 virus on
our Commercial business. Humana
Military Healthcare Services remained
a solid contributor, as it has for more
than a decade.
We were pleased to close 2009
with an appreciable gain in net-new
Medicare Advantage enrollment.
Ending membership rose from just
over 1.4 million at December 31 of
last year to approximately 1.5 million
at December 31, 2009 – a net gain
of nearly 73,000 members. We also
saw a signifi cant shift toward network-
product enrollment as we continued
to increase the size and scope of our
Medicare provider networks throughout
the year. Membership in our Medicare
Advantage network products grew by
28 percent in 2009 versus 2008. These
favorable outcomes were achieved despite
becoming the fi rst major company to
incorporate member premiums across our
Private Fee-for-Service benefi t designs.
For 2010, we again structured premiums
and benefi ts to conform to the changing
payment environment. Additionally, we
are increasingly realizing the benefi cial effect
of our progress on our “15 percent solution”
– our commitment to provide Medicare
Advantage services to our senior members,
with enhanced quality, for at least 15
percent less than it costs the federal
government to provide the same or lesser
services – which helps mitigate the effect of
this changing environment and allows our
value proposition to remain strong.
Initial results from the 2010 selling
season show higher Medicare Advantage
membership retention ahead of previous
expectations. Medicare Advantage
plan membership grew approximately
220,000 in January, bringing our
January 31, 2010 enrollment to
approximately 1,729,000. Importantly,
we also saw the continued growth in
members opting for network-based
products, with 71 percent of our fully-
insured Medicare Advantage enrollment
choosing coordinated care plans. In
addition to the individuals who are
joining our plans, employer groups
are beginning to see the benefi ts of
Medicare Advantage as a solution
to their retiree-health care coverage
needs. Our breadth of product offerings
nationally positions us well to grow
in the group Medicare market.
The other major portion of our
Government business involves our
long-standing relationship with the
U.S. Department of Defense (DoD) to
administer a contract under its TRICARE
Operational Discipline in a Tumultuous Environment
0
500
1000
1500
2000
Dec. 2006 Dec. 2007 Dec. 2008 Dec. 2009 Jan. 2010
PFFS HMO PPO ASO
32009AnnualReport
Medicare Advantage Membership
in thousands