Humana 2014 Annual Report Download - page 59
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51
group accounts. Approximately 65% of our fully-insured commercial group medical membership was in small
group accounts at December 31, 2014 compared to 61% at December 31, 2013.
• Group ASO commercial medical membership decreased 58,500 members, or 5.0%, from December 31, 2013
to December 31, 2014 primarily due to continued pricing discipline in a highly competitive environment for
self-funded accounts. We expect our group ASO commercial medical membership to decline by approximately
400,000 to 425,000 members January 1, 2015 primarily due to the loss of a few large group accounts.
• Group specialty membership decreased 278,100 members, or 4.1%, from December 31, 2013 to December 31,
2014 primarily due to declines in dental and vision membership related to our planned discontinuance of
certain unprofitable product distribution partnerships.
Premiums revenue
• Employer Group segment premiums increased $1.0 billion, or 9.2%, from 2013 to 2014 primarily due to higher
average group Medicare Advantage membership as well as an increase in fully-insured commercial group
medical premiums per member that more than offset a slight decline in total membership for this segment.
Benefits expense
• The Employer Group segment benefit ratio increased 40 basis points from 83.5% in 2013 to 83.9% in 2014
primarily due to higher utilization, mainly due to higher specialty prescription drug costs associated with a
new treatment for Hepatitis C, as well as the continuing impact of transitional policy changes, partially offset
by the inclusion of the health insurance industry fee and other fees mandated by the Health Care Reform Law
in our pricing.
• The Employer Group segment’s benefits expense included the beneficial effect of $132 million in favorable
prior-year medical claims reserve development versus $138 million in 2013. This favorable prior-year medical
claims reserve development decreased the Employer Group segment benefit ratio by approximately110 basis
points in 2014 versus approximately 130 basis points in 2013.
Operating costs
• The Employer Group segment operating cost ratio of 16.1% increased 20 basis points from 2013. This increase
primarily reflects the impact of the non-deductible health insurance industry fee and other fees mandated by
the Health Care Reform Law as well as a higher percentage of small group commercial business which carries
a higher operating cost ratio than large group business. These increases were partially offset by an increase
in group Medicare Advantage membership which generally carries a lower operating cost ratio than our
commercial group medical membership as well as operating cost efficiencies.