In February 2023, Humana announced its planned exit from the Employer Group Commercial Medical Products business, including fully insured, self-funded, and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs. The exit will be phased over 18-24 months.

Individual Medicare Advantage membership increased 843,300 members, or 18.5%. At December 31, 2023, approximately 3,764,300 members, or 70%, of individual Medicare Advantage members were in value-based relationships under our integrated care delivery model.

In 2020, our Primary Care Organization entered into a strategic partnership with Welsh, Carson, Anderson & Stowe, or WCAS, to accelerate the expansion of our primary care model. As of December 31, 2023, there were 108 primary care clinics operating under the partnership.

In order to create capacity to fund growth and investment in our Medicare Advantage business and further expansion of our healthcare services capabilities beginning in 2022, we committed to drive additional value for the enterprise through cost saving, productivity initiatives, and value acceleration from previous investments.

CMS estimates Medicare Advantage plans across the sector will, on average, experience a 0.16% decrease in benchmark funding based on proposals included in the Advance Notice. Based on our preliminary analysis using the same factors included in CMS' estimate, the proposals in the Advance Notice would result in a change to our benchmark funding that is approximately 160 basis points worse than our expectation of a flat rate environment.

As part of our internal compliance efforts, we routinely perform ordinary course reviews of our internal business processes related to, among other things, our risk coding and data submissions in connection with the risk adjustment model. These reviews may also result in the identification of errors and the submission of corrections to CMS that may, either individually or in the aggregate, be material.

If we do not design and price our products properly and competitively, if the premiums we charge are insufficient to cover the cost of health care services delivered to our members...our profitability may be materially adversely affected.

We are in a highly competitive industry...In addition to the challenge of controlling health care costs, we face intense competitive pressure to contain premium prices.

The policies and decisions of the federal and state governments regarding the Medicare Advantage and Prescription Drug Plans, military services and Medicaid programs in which we participate have a substantial impact on our profitability.

We are in a highly competitive industry. Our competitors vary by local market and include other managed care companies, national insurance companies, and other HMOs and PPOs. Many of our competitors have a larger membership base and/or greater financial resources than our health plans in the markets in which we compete.

While health plans compete on the basis of many factors, including service and the quality and depth of provider networks, we expect that price will continue to be a significant basis of competition.

Key to our operational strategy is the implementation of clinical initiatives that we believe provide a better health care experience for our members, lower the cost of healthcare services delivered to our members, and appropriately document the risk profile of our members.

The consolidated operating cost ratio decreased 120 basis points from 13.7% in 2022 to 12.5% in 2023. The ratio decrease was primarily due to the divestiture of the 60% ownership of Gentiva Hospice in August 2022...and scale efficiencies associated with growth in individual Medicare Advantage membership.

The consolidated operating cost ratio decreased...primarily due to...the impact of significantly reduced compensation accruals in 2023 for the annual incentive plan offered to employees across all levels of the company.

Factors may and often do cause actual health care costs to exceed what was estimated and used to set our premiums. These factors may include: increased use of medical facilities and services, and the increased cost of such services; increased use or cost of prescription drugs, including specialty prescription drugs; the introduction of new or costly treatments, prescription drugs, or new technologies.

Our business depends significantly on effective information systems and the integrity and timeliness of the data we use to run our business. Our business strategy involves providing members and providers with easy to use products that leverage our information to meet their needs.

We have been, and will likely continue to be, regular targets of attempted cybersecurity attacks and other security threats and may be, and have been, subject to breaches of our information technology systems, including breaches of the information technology systems of third-party service providers.

We also enhance our information technology infrastructure and security protocols to assess, identify, protect against, and manage material risks from cybersecurity threats following a risk-based approach.

We repurchased common shares for $1.6 billion...and paid dividends to stockholders of $431 million in 2023.

In November 2023, we issued $500 million of 5.750% unsecured senior notes due December 1, 2028 and $850 million of 5.950% unsecured senior notes due March 15, 2034.

During 2023, we entered into interest-rate swap agreements with major financial institutions to convert our interest-rate exposure on our $750 million of 5.875% senior notes, our $750 million of 5.500% senior notes, our $500 million of 3.950% senior notes and our $850 million of 5.950% from fixed rates to variable rates to align interest costs more closely with floating interest rates received on our cash equivalents and investment securities.

Our associates are essential to our success in delivering on our core strategy, and creating positive healthcare experiences for our members. We are committed to recruiting, developing, and retaining strong, diverse teams, actively promoting a culture of inclusion and diversity.

We regularly measure our success and seek opportunities to advance engagement through an Associate Experience Survey, or AES, and continuous listening campaigns.

Through alternative work styles, such as home, hybrid home, office, hybrid office, and field, we help associates work more productively, communicate more easily and collaborate more freely.

It is reasonably possible that these laws and regulations, as well as other current or future legislative, judicial or regulatory changes...may have a material adverse effect on our results of operations.

We are subject to various other governmental audits and investigations. Under state laws, our HMOs and health insurance companies are audited by state departments of insurance for financial and contractual compliance. Our HMOs are audited for compliance with health services by state departments of health.

We are subject to various federal and state healthcare fraud and abuse laws including the federal False Claims Act (the "False Claims Act"), the federal anti-kickback statute (the "Anti-Kickback Statute"), the federal "Stark Law," and related state laws.