Insurers Aetna, WellPoint look for their place in health reform; WellPoint profit up

Aetna President Mark Bertolini said Wednesday that his company has seen much slower sales of national insurance accounts where large employers pay Aetna to administer plans for employees, The Associated Press reports. Under the new health overhaul, Bertolini said he expected less movement in that market because of the uncertainty in the law. "We think that's related to both the economy and to health care reform. However, we are seeing some consolidation as employers try to simplify their offerings, and so we expect to see some of that activity. We do see it, still, as a very competitive market ... there still will be some downward pressure on fees. So, it's a tough selling season, all in," Bertolini said (7/28).

In the meantime, WellPoint is seeking to become a bigger player in Medicare, Reuters/Fox Business reports. "WellPoint Inc wants to expand its Medicare business to take advantage of the post-war baby boom generation becoming eligible for the U.S. government-sponsored health program, the health insurer's chief financial officer said on Wednesday. WellPoint can 'absolutely' compete with the two biggest Medicare players — UnitedHealth Group Inc and Humana Inc — and will take market share over the next three to five years, WellPoint CFO Wayne DeVeydt said in an interview" (Krauskopf, 7/28).

WellPoint's profit has also risen four percent for the second quarter over the last year despite lower revenue, the Los Angeles Times reports. "WellPoint runs Blue Cross Blue Shield plans in 14 states and is the parent of Anthem Blue Cross of California, the state's largest for-profit health insurer." For the first half of 2010, WellPoint's profits were up 26 percent from the first half of 2009. "Even as Chief Executive Angela F. Braly reported the rising earnings, she told analysts Wednesday that the company expected to suffer a loss in California this year because of trouble with contentious rate increases for individual policyholders. WellPoint put rate increases of up to 39% on hold in March amid criticism by consumers, regulators and politicians, and then canceled the hikes in April after errors were uncovered in the paperwork accompanying them. The insurer has since filed for new premiums with a maximum increase of 20%" (Helfand, 7/29).

The Indianapolis Star: Braly "called the situation in California unsustainable and pointed to a need to secure timely rate increases in order to cover rising medical costs. 'We expect over time appropriate rates will be granted in order to sustain this important market segment for the many Americans it will serve,' Braly said. 'Creating a fundamentally sustainable marketplace will be critical.'" The insurer is still also worried over regulations from the Department of Health and Human Services that define what counts as a medical care expense. The health law requires insurers to spend at least 80 percent of premiums they gather in the individual market on care — that figure is 85 percent in larger plans (Lee, 7/29).