(Reuters) -Health insurer Humana Inc joined larger rival UnitedHealth in warning of a jump in medical costs this year due to higher-than-expected demand for surgeries and other medical procedures.
Claims for health insurance are on the rise as staffing shortages ease at hospitals and older adults catch up on missed hip and knee replacements as well as other non-urgent surgeries that they had delayed during the pandemic.
Humana on Friday also pointed to elevated demand for outpatient surgeries and dental services, as well as strong inpatient demand in recent weeks, a trend it said was diverging from historical seasonality patterns.
Costs are also seen rising due to higher-than-expected enrollments driven by people becoming eligible for Humana’s privately-run Medicare Advantage plans – the government insurance for those aged 65 years and older. Costs typically tend to run higher for those individuals.
Humana now expects its medical loss ratio – the percentage of claims paid out compared with premiums collected – at the top end of its full-year projected range of 86.3% to 87.3%.
Despite increased costs, the company reaffirmed its adjusted earnings forecast of at least $28.25 per share for 2023.
The health insurer generated more than 80% of its premiums and services revenue in 2022 from offering government-backed Medicare plans.
UnitedHealth had flagged higher costs earlier this week following an increase in surgeries among older adults, wiping out billions in the market capitalization of health insurers including Humana.
On the flip side, the rise in medical procedures is expected to help hospital operators and medical device makers, especially those in the orthopedic space.
(Reporting by Leroy Leo in Bengaluru; Editing by Anil D’Silva and Devika Syamnath)
