After a handful of publicly traded insurers last month reported second-quarter 2023 earnings that reflected the impact of increasing utilization, additional insurers reporting results in August said they witnessed a similar phenomenon, particularly among the Medicare Advantage population. But the insurers indicated that they were able to factor those trends into their bids for the coming plan year, while analysts were reassured that the issue was largely confined to MA and not the commercial sector.
UnitedHealth Group first disclosed the uptick in outpatient care utilization in June, sparking an insurer-stock selloff. Shortly after, Humana Inc. revealed in an 8-K filing with the U.S. Securities and Exchange Commission that it was also seeing elevated medical costs due to an increased use of services. Humana in that filing projected its insurance medical loss ratio (MLR) for the full year would settle in the higher (worse) end of its previously stated 86.3% to 87.3% range. “This expectation is primarily driven by the emergence of higher than anticipated non-inpatient utilization trends, predominantly in the categories of emergency room, outpatient surgeries, and dental services, as well as inpatient trends that have been stronger than anticipated in recent weeks, diverging from historical seasonality patterns,” the MA-focused insurer stated. The company also explained that it was seeing strong growth in its MA membership, including a “higher-than-expected proportion of age-ins” during the three-month Open Enrollment Period that ran from January to March, and such members tend to have an above-average MLR when compared to more established customers.