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News this week that Humana would depart as a member of the nation’s powerful health insurance trade group is the latest cost-cutting move amid speculation the insurer is looking for a merger partner.
Humana is leaving America’s Health Insurance Plans, the lobby that includes Anthem, Centene, Cigna and Kaiser Permanente in what some in Washington see as a blow to the trade group. UnitedHealth Group and Aetna have also left AHIP in recent years though AHIP said it also added 12 members last year including WellCare Health Plans.
But neither Humana nor AHIP say the insurer is leaving over a policy dispute. “We were informed it was a business decision,” AHIP said of Humana's decision to leave the trade group.
Humana has been cutting costs, employees and selling non-core assets as rivals in the insurance and drug benefit business clean up their balance sheets for possible sale. Humana wouldn’t say how much it paid AHIP in annual dues.
Humana, Aetna and UnitedHealth Group are all insurers that have scaled back their individual coverage offerings off of public exchanges under the Affordable Care Act, which AHIP has been aggressively defending. Aetna, UnitedHealth and Humana are also becoming more than just health insurance companies, increasingly getting into the business of providing healthcare. Thus, their lobbying agenda is more complex than it has been in the past.
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Humana rival Aetna has negotiated a sale to drugstore giant CVS Health while the nation’s largest health plan, UnitedHealth Group, continues to gobble up larger providers of medical care under its Optum health services unit.
“Humana has not actively participated in AHIP since early 2017,” Humana spokesman Alex Kepnes said. “Our focus continues to be on improving the health care of the millions of Americans we serve through our growing clinical platform and deeper integration with doctors and other health care professionals.”
To be sure, Humana is working on closer ties with medical care providers. Humana last month announced plans to acquire a 40% stake in Kindred Healthcare’s home division for $800 million as the insurer looks to integrate outpatient services with its health plans.
Another signal Humana was looking at a possible merger or sale was a Thanksgiving Eve filing with the Securities & Exchange Commission by the insurer adopting a new “change in control policy.” Humana attempted a sale to Aetna but the companies aborted those plans last year amid antitrust scrutiny.
It’s not uncommon for companies looking to merge to first cut costs and improve their bottom lines to become more attractive to a potential suitor.
Humana is in the process of cutting 2,700 jobs, or nearly 6% of its workforce as the insurer looks to offer more price-competitive products and invests in technology. Humana also announced a sale of a life insurance investment, spurring additional buyout speculation in its Louisville hometown.
