(Story updated at 1:19 p.m. ET)
Aetna's total medical membership fell by almost a half million people since the start of the year, but the Hartford, Conn.-based health insurer was still able to build revenue.
Aetna recorded a net loss of 498,000 members in the past three months, but still recorded enrollment that was higher-than-expected at 23 million total members.
Approximately 647,000 people from self-insured and fully insured employers dropped Aetna coverage. Instead, as has been the case for the past several quarters, Aetna fortified its government-sponsored business by increasing enrollment in Medicare Advantage and Medicaid.
Medicare and Medicaid generate much higher revenue. Aetna's total revenue in the first quarter increased 4% year over year, totaling $15.7 billion. However, profit declined 7% to $727 million because of the lower margins associated with government insurance programs.
Still, Aetna raised its profitability projections for the rest of the year. Previously, Aetna estimated operating earnings per share would be “at least” $7.75, and now Aetna boosted that outlook to $7.90 to $8.10.
As of March 31, Aetna also had 1.2 million people covered in the individual market, CEO Mark Bertolini said on an investor call Thursday. Approximately 911,000 of them bought plans on the Affordable Care Act's state and federal exchanges. Bertolini remarked earlier this year that Aetna has “serious concerns about the sustainability of the public exchanges,” but he said Thursday his team believes the plans will improve this year.
Anthem also expressed optimism toward the ACA's exchanges this week, while Centene Corp. acknowledged it was making a decent amount of money on its ACA plans. UnitedHealth, meanwhile, is exiting most of its exchanges for 2017.
Aetna experienced higher medical claims costs in the first quarter, echoing what Anthem and UnitedHealth Group reported in their most recent earnings. The extra day of claims due to the leap was a major factor, Aetna said.
The biggest question for Aetna remains its pending acquisition of Humana, which would make Aetna the largest Medicare Advantage insurer in the country. Aetna still expects the deal to close later this year after state regulators and the Justice Department finish their antitrust review. But hospitals and consumer advocates have fiercely opposed the merger, along with Anthem's takeover of Cigna Corp.