© Reuters. Signage for Humana Inc. is pictured at a healthcare facility in Queens, New York, U.S., November 30, 2021. REUTERS/Andrew Kelly
By Manas Mishra and Leroy Leo
(Reuters) – Humana Inc joined the largest health insurer UnitedHealth (NYSE:) on Friday in warning of rising medical costs this year due to higher-than-expected demand for surgeries and other medical procedures.
Health insurers see increased payouts as staffing shortages ease at hospitals and Medicare-covered seniors catch up on missed hip and knee replacements and other elective surgeries delayed during the pandemic .
“Now, with the lifting of restrictions and the official end of the public health emergency at the national level, we are going to see that (the surgeries) return,” said Pavani Rangachari, professor of health and healthcare administration. public at the University. of New Haven.
Demand for these procedures is also being fueled by an aging population of baby boomers, increasing life expectancies and a shift towards value-based care where payments are based on health outcomes rather than services. provided, she said.
Humana (NYSE:) also noted elevated demand for outpatient surgeries and dental services, as well as strong inpatient demand in recent weeks, a trend it said deviated from historical seasonal patterns.
UnitedHealth had reported higher costs earlier this week following an increase in surgeries among Medicare-eligible adults, wiping out billions in market capitalization from health insurers, including Humana.
Humana and UnitedHealth are the main providers of Medicare Advantage plans for people age 65 and older in which private insurers are paid a fixed rate by the government.
Kentucky-based Humana now expects its medical claims ratio — the percentage of claims paid versus premiums collected — to be at the high end of its projected full-year range of 86.3%. at 87.3%.
Still, the company reaffirmed its adjusted earnings forecast of at least $28.25 per share for 2023.
Shares of Humana were down 1.9% in early trading on Friday, while other insurers were down slightly.