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Joseph Swedish, WellPoint
Swedish

WellPoint gains policyholders as earnings slip


By Virgil Dickson
Posted: July 30, 2014 - 12:15 pm ET
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WellPoint, repeating a pattern reported by insurer Humana, saw its customer base increase significantly while its earnings fell during the second quarter.

The Indianapolis-based insurer added 769,000 customers year-to-date through state and federal exchanges, and said it is pleased with its mix of new customers.

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Overall, costs of the new enrollees are in line with expectations, according to CEO Joe Swedish. But given that coverage for many new enrollees just began in May, it's too early to discuss utilization trends, he said. Still, the company expects profit margins will be in the 3% to 5% range for exchange products.

Government business also was a strong provider of growth for the company as it added 325,000 new Medicaid beneficiaries. WellPoint had been known as a provider of private Blue Cross and Blue Shield plans, but has been expanding into Medicare and Medicaid offerings as well as coverage for government employees.

The company raised it target for Medicaid plan sign-ups to between 500,000 and 600,000 people this year from prior estimates of 400,000 to 500,000.

Overall, company medical enrollment grew to about 37.3 million members in the quarter, up 4.5% from 35.7 million a year ago.

Net income for the quarter fell to $731 million compared to $800 million during the same period last year. However, operating revenue rose 4.2% to $18.2 billion, compared with approximately $17.5 billion in the same quarter last year.

In April, WellPoint announced that it added $100 million to its projected hepatitis C expenditures for the remainder of the year. For now, this amount appears to be appropriate for the demand it is seeing, Swedish said. Spending on hepatitis C medications has gone down in recent weeks, he added. However, he expects spending to spike again once new hepatitis C drugs hit the market later this year.

Of the hepatitis C claims coming in, 40% are for customers in commercial plans, 35% from Medicaid beneficiaries and 25% from those in Medicare offerings. This breakdown is consistent with trends in the first quarter, Swedish said.

Follow Virgil Dickson on Twitter: @MHvdickson


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