Humana 2011 Annual Report Download - page 59
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The consolidated operating cost ratio for 2011 was 14.8%, increasing 160 basis points from the 2010
operating cost ratio of 13.2%. The $147 million write-down of deferred acquisition costs in 2010 increased the
operating cost ratio 50 basis points for 2010. Excluding the impact of the write-down of deferred acquisition
costs in 2010, the increase primarily reflects the greater percentage of our revenues derived from Concentra,
acquired December 21, 2010, in our Health and Well-Being Services segment, which carries a higher operating
cost ratio on external revenues than our other segments, as well as an increase in the Retail and Employer Group
segment operating cost ratios.
Depreciation and Amortization
Depreciation and amortization for 2011 totaled $270 million, an increase of $25 million, or 10.2%, from
2010, primarily reflecting depreciation and amortization expense associated with our Concentra operations,
acquired on December 21, 2010.
Interest Expense
Interest expense was $109 million for 2011, compared to $105 million for 2010, an increase of $4 million,
or 3.8%.
Income Taxes
Our effective tax rate during 2011 was 36.5% compared to the effective tax rate of 37.2% in 2010. The
higher tax rate for 2010 primarily was due to the cumulative adjustment associated with estimating the
retrospective aspect of new limitations on the deductibility of annual compensation in excess of $500,000 per
employee as mandated by the Health Insurance Reform Legislation. See Note 10 to the consolidated financial
statements included in Item 8. – Financial Statements and Supplementary Data for a complete reconciliation of
the federal statutory rate to the effective tax rate.
Retail Segment
Change
2011 2010 Members Percentage
Membership:
Medical membership:
Individual Medicare Advantage .................... 1,640,300 1,460,700 179,600 12.3 %
Individual Medicare stand-alone PDP ............... 2,540,400 1,670,300 870,100 52.1 %
Total individual Medicare .................... 4,180,700 3,131,000 1,049,700 33.5 %
Individual commercial ........................... 493,200 411,200 82,000 19.9 %
Total individual medical members .............. 4,673,900 3,542,200 1,131,700 31.9 %
Individual specialty membership (a) .................... 782,500 510,000 272,500 53.4 %
(a) Specialty products include dental, vision, and other supplemental health and financial protection products.
Members included in these products may not be unique to each product since members have the ability to
enroll in multiple products.
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