WellPoint profit falls 8%
Health insurance giant WellPoint Inc. reported an 8% drop in first-quarter profit, hurt by lower enrollment and rising costs.
The nation’s second-largest health insurer — after UnitedHealth Group Inc. — runs Anthem Blue Cross in California and plans in 13 other states. It reported net income of $856.5 million, or $2.53 a share, for the three months ended March 31, compared with net income of $926.6 million, or $2.44 a share, a year ago. Revenue grew 4% to $15.42 billion in the quarter. Shares of WellPoint dropped 36 cents to $70.40.
Overall enrollment for the Indianapolis company dipped 2% to 33.7 million since the end of December. Last week, UnitedHealth reported a 3% enrollment increase to 35.6 million for the same period.
WellPoint said its costs for medical claims climbed 5% to $11.77 billion in the quarter. Like other insurers, WellPoint attributed most of that increase to higher prices for medical care.
In recent quarters, most health insurers have been recording robust profits as patients postponed care in a sluggish economy. But WellPoint had struggled with higher-than-expected claims from a Medicare plan in Northern California last year, which hurt earnings and rattled investor confidence in the company.
WellPoint exited that specific plan and said it continued to gain traction in its Medicare business, adding 165,000 seniors during the first quarter. Last year, it acquired CareMore Health Group, which runs Medicare plans that specialize in helping seniors with higher medical needs.
On a conference call with analysts and investors, Angela Braly, WellPoint’s chief executive, said the company has 29 CareMore clinics in California, Nevada and Arizona and has plans to add 12 more this year. WellPoint is participating in a government program in Los Angeles aimed at providing better care at lower costs for patients enrolled in both Medicare and Medicaid. Braly said the company would be pursuing similar government contracts in California and other states.
She criticized a proposed ballot measure in California that would give the insurance commissioner the power to approve or deny health insurance rate increases. Braly said federal officials have already determined that the state has an effective system for reviewing rates.
“We really think it’s a redundant process,” she said.
Jamie Court, president of Consumer Watchdog, the Santa Monica advocacy group pushing the ballot initiative, said it has collected about 500,000 signatures and hopes to turn in more than 750,000 by mid-May in order to qualify for Nov. 6 ballot.