LOUISVILLE, Ky. - Health insurer Humana Inc. said Monday its first-quarter profit more than doubled as its government business surged from higher membership in its Medicare Advantage plans and lower expenses in Medicare drug plans that sapped earnings a year ago.

The company also raised its full-year earnings outlook to between $6.10 and $6.20 per share, up from $5.90 to $6.10 per share.

Humana's employer-sponsored health coverage business showed some resilience despite the country's economic turmoil, but the company doesn't expect that to last. Other major health insurers have seen those business lines plunge as their employer customers cut jobs because of the recession.

Humana's commercial segment medical membership stayed roughly flat compared with a year earlier at 3.47 million as of March 31, though it's down 149,300 from the end of 2008.

However, Humana executives predicted the company's commercial medical membership for the full year would be down 150,000 to 175,000 from the end of 2008, due mostly to declining small-group membership numbers as those employers struggle.

"It has become clearer that the prolonged recession is having a more significant adverse impact on smaller employers than we previously estimated," Humana Chief Financial Officer Jim Bloem said Monday in a conference call with industry analysts.

Health insurers WellPoint Inc. and UnitedHealth Inc. last week both posted declines in employer-sponsored business.

Humana said it earned $205.7 million, or $1.22 per share, for the quarter ended March 31, compared with profit of $80.2 million, or 47 cents per share, a year ago. Revenue rose 11 percent to $7.71 billion.

Wall Street analysts polled by Thomson Reuters forecast profit of $1.18 per share on $7.65 billion in revenue.

"We expect the remainder of 2009 to extend the success we had in the first quarter," Michael B. McCallister, Humana's president and chief executive, told industry analysts.

Humana said its benefit expenses in the quarter consumed a smaller percentage of premium revenue than a year ago, as expected, due to improvements in its government and commercial segments. The company said the reduction was due to better claims oversight, resulting in it paying out proportionately fewer dollars. That oversight has focused on making sure claims are legitimate and aren't duplicates, the company said.

In a note to investors Monday morning, Goldman Sachs analyst Matthew Borsch said Humana's performance showed "many areas of strength" with "overall good earnings quality."

Louisville-based Humana posted a dramatic turnaround in pretax income from its vast government segment, increasing to $166.1 million in the just-ended quarter compared with a loss of $3.2 million a year ago.

The surge was driven mainly by lower claims expenses in its Medicare prescription drug plans, a big increase in average Medicare Advantage membership and the start of member premiums for most of its Medicare Advantage plans, the company said.

Humana said its Medicare Advantage membership grew to nearly 1.47 million members as of March 31, up 16 percent from a year ago, and up 2 percent from the end of 2008. The year-over-year increase included 94,900 members added through acquisitions in 2008.

McCallister said Humana expects to net about 50,000 new Medicare Advantage members this year.

Medicare Advantage premiums of $4.06 billion in the first quarter were up 28 percent from a year ago. Medicare Advantage plans are government-sponsored, privately run programs for seniors that offer comprehensive health coverage.

Membership in Humana's stand-alone Medicare prescription drug plans totaled nearly 2.08 million as of March 31, down from 3.15 million members a year ago. Humana said the decline came from raising premiums and adjusting benefits. Greater use of generic drugs also helped the plans' profit margins.

A year ago, higher-than-expected claims in the Medicare prescription plans caused a drag on Humana's earnings.

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