Humana Plans 25% Increase in Medicare Advantage Membership

Humana anticipates a 25% increase in Medicare Advantage (MA) membership this year, driven by a focus on maintaining existing member relationships. President and CEO Jim Rectin revealed these plans during the first-quarter earnings call, emphasizing the company's goal to expand margin growth to 3%, effectively doubling its current MA margin. As a significant competitor alongside UnitedHealthcare, this strategy marks a pivotal move in the MA market.

The company has adjusted its benefits offerings to maintain margins amidst rising medical utilization rates. This strategic approach aims to minimize the impact on valued member benefits, leading MA insurers, including Humana, to scale back their geographic presence. By 2026, Humana's service will reduce from 89% of counties to 85%, now offering MA plans across 46 states and Washington, D.C.

To boost operational efficiency, Humana is focusing on team function consolidation and process automation. Rectin highlighted the company's preparation for bid submissions, responding to the Centers for Medicare Services (CMS) decision to increase MA rates by 2.5%, which was initially expected to be a mere 0.09% rise. This adjustment, he noted, contributes to industry stability amid escalating medical costs.

During the quarter, Humana's net income decreased to $1.18 million, down from $1.24 million in the same period of 2025. Despite this, revenues surged to $39.6 million from $32.1 million, surpassing Wall Street forecasts. Rectin reiterated Humana's commitment to goals stated during the June 2025 Investor Day, with member growth and Medicare Advantage star-rating performance meeting expectations through enhanced member engagement and improved management of chronic conditions.

Achieving higher star ratings remains pivotal for Humana, as it directly influences substantial bonus payments. However, a Texas court dismissed Humana's second lawsuit over MA star ratings downgrades by the Centers for Medicare and Medicaid Services, which cost the company more than $1 billion in bonus payments after a reduction from 4 to 3.5 stars in 2024.

Humana has also experienced a 50,000-member growth in Medicaid from expansions in states like Michigan, Illinois, and South Carolina. Additionally, the company projects a 22% patient increase in its CenterWell Senior Primary Care segment, propelled by acquiring MaxHealth, which added approximately 59,000 patients and 54 centers to the network.

Moreover, Humana's CenterWell Pharmacy has expanded its partnership with the Mark Cuban Cost Plus Drug Company, aiming to develop new comprehensive prescription solutions for employers, reflecting ongoing efforts to enhance pharmaceutical services.