WellPoint’s Profits Are Up; CEO Says Premiums Would Rise Under Health Overhaul
WellPoint's profits are up in the fourth quarter. Meanwhile, CEO Angela Braly says premiums would rise under the Democrats' plans to require insurers to cover all Americans.
WellPoint "posted an eightfold increase in profit for the fourth quarter and projected solid earnings for this year despite a recent softening in enrollments and revenue from premiums," The Los Angeles Times reports. "WellPoint Inc., the nation's largest health insurer by membership, earned $2.7 billion, or $5.95 a share, for the final three months of last year, compared with profit of $331.4 million, or 65 cents a share, for the same period the previous year. Quarterly sales rose 26% to $19 billion from $15.1 billion. The huge increase in profit came largely from the gain on the $4.7-billion sale of WellPoint's NextRx pharmacy benefit management subsidiaries in December." Enrollment and premium revenues declined however, "largely the result of the recession as employers slashed jobs and health benefits" (Helfand, 1/28).
The Wall Street Journal/Dow Jones Newswires: "Medical costs as a percentage of revenue, or medical cost ratio, increased year over year because of the flu outbreak and business mix changes, including more members receiving coverage for the unemployed, a high-expense program. ... The company's overhead-expense ratio increased because of restructuring activities, notably costs associated with 'right-sizing' prompted by membership declines, the sale of the pharmacy benefit business and the withdrawal of UniCare commercial plans from Texas and Illinois" (Brin, 1/27).
Bloomberg: Braly "said the cost of premiums will rise if Democrats force plans to cover people with pre-existing conditions. Insurers went along with eliminating their practice of refusing coverage based on pre-existing medical conditions because the legislation also required 30 million more Americans to get coverage. Without those added customers, insurance companies will raise rates to cover the cost of the sicker people, Braly said in a telephone interview today" (Wechsler and Nussbaum, 1/27).