National health insurer Anthem continued its streak of higher quarterly profit in the third quarter of 2018 as it grew Medicare Advantage membership, raised premiums to cover medical costs and spent less money on claims.
Indianapolis-based Anthem reported net income of $960 million in the three months ended Sept. 30, up 28.5% year over year. Meanwhile, its revenue totaled $23.3 billion, an increase of 3.7% over the third quarter in 2017. Revenue from premiums and administrative fees both grew in the third quarter. And Anthem said it raised premiums to cover higher costs and the return of the Affordable Care Act tax on health insurers.
"Our third quarter 2018 results reflect solid operating performance and ongoing positive momentum across our businesses, and I am confident that we are entering 2019 in a position of strength," Anthem President and CEO Gail Boudreaux said in a statement. "We have made significant progress towards improving execution and are focused on advancing our consumer, clinical and digital capabilities."
Membership totaled 39.5 million members at Sept. 30, a decrease of 1.9% from the same period a year ago driven by fewer individual ACA-compliant members. Anthem served 692,000 individual members in the quarter, down 59.2% over the same period a year ago.
Its local group and Medicaid membership also dipped slightly: Medicaid membership decreased by less than a percent to 6.4 million, and local group membership dropped by 1% to 15.7 million.
However, Anthem grew its Medicare Advantage membership by 17.8% year over year to almost 1.8 million at the end of the quarter because of recent Advantage plan acquisitions and growth in its existing counties, the insurer said. It also served slightly more national employer customers.
In the last year, Anthem acquired Florida-based Advantage plans Health Sun and America's 1st Choice. And last quarter, Anthem officials said the insurer would continue to grow membership by enrolling more members where it's already operating while also expanding into nearby counties in 2019, with a focus on serving both group Advantage members and the medically complex dual-eligible population.
Anthem's medical loss ratio—the amount per premium dollar used to pay claims and improve care quality— was 84.8% in the third quarter compared with 87% a year ago. Anthem attributed the decrease to the return of the health insurer tax, as well as lower medical costs in its commercial and specialty lines of business.