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Humana, the country's second-largest Medicare Advantage insurer, pointed to rising medical costs – due in large part to increased utilization of services and an Advance Notice payment rate for MA that executives said came in below the medical cost trend – for its earnings drop.
On Wednesday, Humana reported a 2025 fourth-quarter loss of $1.01 billion, compared with a $862 million loss in Q4 2024.
Its full-year earnings were $1.5 billion, versus $1.7 billion in 2024.
Revenue for the quarter rose to $32.52 billion from $29.21 billion the previous year.
WHY THIS MATTERS
Medicare Advantage membership is expected to grow 25% in 2026.
However, the challenge is in funding that membership. MA margins are slightly below break-even levels but are expected to climb next year.
"We've been managing this proactively," said Humana President and CEO Jim Rechtin.
"We will continue to adapt to our funding environment," Rechtin said. "If the funding environment cannot support the benefit structure, we will adapt as we have in the past."
MA membership is being driven by new sales and improved retention from the company's benefit strategy, Rechtin said.
To maximize value, Rechtin said, plans must be priced appropriately and they must retain membership year-over-year by investing in outcomes.
Current MA membership is up 20%, or about 1 million members, reflecting gains during the recently completed 2026 Annual Election period. Humana reported a retention rate of 500 basis points.
"That is good growth," Rechtin said.
About 70% of new sales are attributed to consumers switching from other MA plans. But the gains were not caused by other insurers exiting or cutting back their footprints in the MA market, according to Rechtin.
The new members are in 4-plus star plans. In total, 45% of members are in plans of 4 or more stars.
In its onboarding in January, Humana observed improved net promoter scores for customer service and a better complaint rate, as well as an increased completion rate on health risk assessments. This is ahead of where Humana was a year ago.
All of these factors impact star ratings.
"We are making progress on stars," Rechtin said.
Higher ratings are tied to bonuses paid to insurers.
Humana lost a lawsuit against the Centers for Medicare and Medicaid Services on star ratings calculations last year.
Humana is seeing continued growth in CenterWell, a provider of senior care, and in Medicaid.
CenterWell Senior Primary Care grew by 100,600 patients, or over 25% in 2025, including approximately 32,000 patients associated with the acquisition of The Villages Health in Florida last year, the company said.
Humana's Medicaid footprint now spans 13 states. This includes an expected launch into Georgia and Texas in 2027.
THE LARGER TREND
Humana is the country's second-largest Medicare Advantage insurer after UnitedHealthcare.
Humana is invested in the MA market, which has seen challenges this year for other insurers such as UnitedHealth and Elevance.
Humana exited the Affordable Care Act market in 2018.
ON THE RECORD
"We were pleased with our solid financial performance and operational progress in 2025," Rechtin said by statement. "We continue to feel good about our consumer-focused strategy and our individual Medicare Advantage membership growth in 2026, which will allow us to build for the future with even better outcomes and experiences."
Email the writer: SMorse@himss.org