Humana 2014 Annual Report Download - page 65

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Change
2013 2012 Dollars Percentage
(in millions)
Premiums and Services Revenue:
Premiums:
Individual Medicare Advantage $ 22,481 $ 20,788 $ 1,693 8.1 %
Medicare stand-alone PDP 3,025 2,853 172 6.0 %
Total Retail Medicare 25,506 23,641 1,865 7.9 %
Individual commercial 1,160 1,004 156 15.5 %
State-based Medicaid 328 185 143 77.3 %
Individual specialty 210 171 39 22.8 %
Total premiums 27,204 25,001 2,203 8.8 %
Services 16 24 (8) (33.3)%
Total premiums and services revenue $ 27,220 $ 25,025 $ 2,195 8.8 %
Income before income taxes $ 1,283 $ 1,161 $ 122 10.5 %
Benefit ratio 84.2% 84.2% — %
Operating cost ratio 10.9% 11.1% (0.2)%
Pretax Results
• Retail segment pretax income was $1.3 billion in 2013, an increase of $122 million, or 10.5%, compared to
2012 primarily reflecting improved operating performance over the prior year. The improved operating
performance primarily was driven by membership growth as well as a decrease in the operating cost ratio.
Enrollment
• Individual Medicare Advantage membership increased 141,100 members, or 7.3%, from December 31, 2012
to December 31, 2013 reflecting net membership additions for the 2013 enrollment season and sales to newly-
eligible Medicare beneficiaries throughout the year. Effective January 1, 2013, we divested approximately
12,600 members acquired with Arcadian Management Services, Inc. in accordance with our previously
disclosed agreement with the United States Department of Justice.
• Medicare stand-alone PDP membership increased 219,000 members, or 7.2%, from December 31, 2012 to
December 31, 2013 reflecting net membership additions, primarily for our Humana-Walmart plan offering,
for the 2013 enrollment season.
• Individual commercial medical membership increased 78,700 members, or 15.1%, from December 31, 2012
to December 31, 2013 primarily reflecting net new sales in 2013. On October 1, 2013, the initial open
enrollment period began for plans effective January 1, 2014 offered through federally facilitated, federal-state
partnerships or state-based exchanges for individuals and small employers (with up to 100 employees),
including certain metropolitan areas in the 14 states where Humana has public exchange offerings.
• State-based Medicaid membership increased 33,400 members, or 64.1%, from December 31, 2012 to
December 31, 2013, primarily driven by the addition of our Kentucky Medicaid contract and Florida Long-
Term Support Services contracts, including American Eldercare.
• Individual specialty membership increased 93,800 members, or 9.9%, from December 31, 2012 to
December 31, 2013 primarily driven by increased membership in dental and vision offerings.
Premiums revenue
• Retail segment premiums increased $2.2 billion, or 8.8%, from 2012 to 2013 primarily due to a 7.6% increase
in average individual Medicare Advantage membership in 2013. Individual Medicare Advantage per member