Humana's Profit Rides Medicare Part D Wave

Well, at least the insurers like Part D - f0r now.

Bloomberg.com reports...

"July 31 (Bloomberg) -- Humana Inc.'s second-quarter profit rose 9.9 percent as the health insurer gained customers in the U.S. Medicare insurance program and commercial and military plans. The shares rose as much as 4.8 percent in early trading.
Net income rose to $89.5 million, or 53 cents a share, from $81.4 million, or 49 cents, a year earlier, Louisville, Kentucky-based Humana said today in a statement. Revenue jumped 52 percent to $5.41 billion.
Chief Executive Officer Michael McCallister has centered a campaign to add customers on Medicare's new Part D drug benefit, and Humana today said it will increase marketing spending in the second half of the year to help do that. The company's Medicare Advantage program -- which combines health and drug benefits -- meanwhile grew faster than Humana had estimated, almost doubling its customers in a year, to 959,800 at June 30.
For 2006, Humana's ``earnings on a year-over-year basis are going to be up substantially, in my view, because of the seasonality of the Part D business,'' said Peter Costa, an analyst in the Boston office of FTN Midwest Securities Inc., in a telephone interview on July 28."

I like the reference to "seasonality" of Plan D. They are referring of course to the so-called "doughnut hole" where your coverage quits after the first $2000 and doesn't resume until you hit over $5100 in annual drug costs.

Your best defense is to know how much you spend in a year on prescription drugs. If it's more than $2000 but less than $5100, you might have to pay for up to $3000 extra for your medications.

That's a lot of money that could be spent getting your scripts from an online pharmacy, at least after the first couple of grand.

For the complete article, go here.

It's interesting to note that the Bloomberg article hints at troubled waters ahead for insurers because of the same doughnut hole effect. The year may start well but the Plan D cash wave heads for the rocks part way through the year for many of Humana's customers. And where the customers go, there goes Humana.