The biggest player in the Affordable Care Act’s online insurance marketplaces delivered encouraging news to Obamacare supporters Wednesday.
After weeks of uncertainty about how many people have been applying for coverage that started Jan. 1, their age spread and whether or not they’re paying premiums, WellPoint disclosed higher-than-expected early membership growth and said it expects to make money on the new enrollees. It’s the most substantial information so far on how a key part of the health law is working out.
“We do feel good about what we’ve seen thus far on the exchanges,” WellPoint CEO Joseph Swedish told stock analysts on a conference call to report 2013 financial results. “While it is early, we are encouraged by the level of applications we’ve received” as well as by the health-risk profiles of new members, he said.
WellPoint bosses also disclosed:
- As of last week about 500,000 people had applied for individual policies, mostly through its Anthem Blue Cross plans. The company expects another surge in late March, when enrollment closes for most people.
- Most are new members, not customers rolling over previous WellPoint insurance. What WellPoint doesn’t know is if they were previously uninsured or had coverage somewhere else.
- More than four-fifths applied through the subsidized, often-troubled online portals run by states or the federal government. The others enrolled directly with the company.
- Thanks to computer troubles, WellPoint is still processing applications this week for coverage effective Jan. 1.
- Most applicants had paid the first month’s premium, “but we’re not at what I’ll call a vast majority yet,” said chief financial officer Wayne DeVeydt.
- New members are older on average than the general population but not more so than expected. WellPoint priced its plans anticipating an older and presumably sicker mix, executives said.
You can read Seeking Alpha’s transcript of the call here.
It’s still very early in the game. But WellPoint’s disclosures were positive enough that one analyst asked why the company wasn’t increasing its profit forecast for 2014.
The chief dangers to plans sold through healthcare.gov and other state insurance portals are that they’ll sign too few members, that members will be sicker than expected and that premium increases to cover their care will make the insurance unaffordable. Investors seemed to see little sign of such risks in WellPoint’s disclosures. The company’s stock popped by $2 a share — more than 2 percent — in early trading.
WellPoint is selling subsidized insurance through online sites in 14 states. Much of its membership comes from its headquarters state of California, where the marketplace rollout has gone better than elsewhere. On the other hand, many of its plans are being sold in states such as Georgia, Wisconsin, Indiana and Virginia, where Republican governors have resisted the ACA rollout. (Democratic Virginia Gov. Terry McAuliffe replaced Republican Bob McDonnell this month.)
Executives didn’t disclose which states their 500,000 applicants came from.
Long before exchange computer problems emerged in October, the Congressional Budget Office projected that 7 million people would gain coverage sold through the marketplaces in 2014.
Last week Marilyn Tavenner, head of the Centers for Medicare and Medicaid Services, said 3 million had applied so far for exchange policies.