WellPoint posts 3% profit decline
Health insurance giant WellPoint Inc. said its profit fell 3% in the second quarter partly because of higher-than-expected medical costs for seniors, particularly in Northern California.
The nation’s second-largest insurer by membership said it earned $701.6 million in the three months that ended June 30, down from $722.4 million a year earlier.
The Indianapolis company said medical claims climbed 8.5% in the second quarter, to $11.92 billion, driven by significant expenses for seniors. It cited in particular new Northern California enrollees with Medicare Advantage plans, which are privately run versions of the federal government’s Medicare insurance program.
WellPoint Chief Executive Angela F. Braly said the company picked up additional Medicare Advantage customers in Northern California as a competitor exited the market, and many of the new policyholders required more medical care than anticipated.
“We’re obviously disappointed with our performance” in senior healthcare, Braly said in a conference call with analysts.
WellPoint shares fell $4.86, or 6.6%, on Wednesday to close at $68.70.
The insurer, which operates Blue Cross Blue Shield plans in 14 states, including California’s Anthem Blue Cross, said its overall membership grew 2% in the second quarter, to 34.2 million from 33.5 million at the same time last year.
Even as membership grew, the company continued to see moderate use of healthcare services overall. Analysts explained that many consumers delay or skip medical care during tough economic times, a trend also seen by other large national insurers.
Aetna Inc. said Wednesday that lower-than-anticipated use of health services among its members contributed to a 9% increase in profit. The Connecticut insurer, the nation’s third-largest by membership, said it earned $536.7 million in the second quarter, up from $491 million a year earlier.
Aetna shares dropped 90 cents, or 2.1%, to close at $41.72.
