Humana warns that rising care costs will persist through 2024, surprises Wall Street with forecast

abcnews.go.com:

Humana still doesn’t know why more people were admitted for short hospital stays than it expected late last year, and that is casting a shadow over health insurers early in 2024

Humana still doesn’t know why more people were admitted for short hospital stays than it expected late last year, and that is casting a shadow over health insurers early in 2024.

Shares of several companies sank again Thursday after Humana debuted an earnings forecast for the new year that fell about $13 short of analyst expectations. Insurer stocks also dropped last week when Humana first disclosed the hospitalization spike and scaled back expectations for 2023.

Health insurers typically see a rise in claims toward the end of each year as flu cases climb and people schedule surgeries before their coverage deductibles renew in January and their out-of-pocket costs rise.

But Humana executives told analysts Thursday that the jump in costs they saw in November and December for Medicare Advantage customers wasn't tied to respiratory illnesses like the flu or COVID-19.

The company saw a rise in patients being admitted to hospitals instead of being held for observation and then released. Chief Financial Officer Susan Diamond said they were still studying claims, but since they don't see signs that the trend was temporary, they had to assume that it will persist through 2024.

The health insurer also is seeing more growth in care that doesn’t involve a hospital stay, like doctor visits and outpatient surgeries and the use of supplemental benefits.

Medicare Advantage plans are privately run versions of the federal government’s Medicare program mostly for people age 65 and older. Humana has nearly 6 million people enrolled in Medicare Advantage plans.

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