Lobbying Charges Shrink for Humana - Analyst Blog

Humana Inc. (HUM) spent $270,000 during the second quarter 2010 to encourage programs of health promotion or disease prevention. The lobbying charges were down by more than half from the $580,000 spent during the second quarter of 2009, while it increased 9% from $248,000 in the first quarter of 2010.

Humana lobbied Congress on the Healthy Hunger-Free Kids Act to improve the food services provided in schools; the Fitness Integrated with Teaching (FIT) Kids Act to deal with childhood obesity; and the Healthy Communities through Helping to Offer Incentives and Choices to Everyone in Society Act to provide a comprehensive approach to regulating and treating obesity. In addition, Humana lobbied the White House and the Centers for Medicare and Medicaid Services in the quarter.

In addition to all of this, Humana lobbied on health reform issues and federal stimulus legislation in the second quarter of 2009.

Competitors WellPoint Inc. (WLP) spent $1.1 million and UnitedHealth Group Inc. (UNH) spent $650,000 in the second quarter to lobby the federal government on issues tied to the recently passed health care reform bill.

WellPoint lobbied Congress, the National Economic Council, the Centers for Medicare and Medicaid Services, and the departments of Health and Human Services and Commerce. Besides the reform law, UnitedHealth also lobbied on the Hiring Incentives to Restore Employment Act, the American Jobs and Closing Tax Loopholes Act of 2010 and the Health Insurance Industry Fair Competition Act.

In addition to the concerns of health insurance reforms, Humana is also concerned about the weakness in the Commercial segment, whose membership plummeted 4.7% year over year in the second quarter 2010, as the employer-sponsored insurance enrollments declined amid the sluggish economy. We believe the health reforms to increase unemployment and stretch profit margins of Humana and its competitors. The resulting downward pressure is likely to overshadow the stock.

Currently, Humana carries a Zacks #3 Rank, which translates into a short-term 'Hold' recommendation, indicating no clear directional pressure on the shares over the near term.

 
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