WellPoint Reports Drop in Q1 Profit, Cites Rising Health Care Costs
Insurer WellPoint reported that profits in the first quarter of 2012 were down 8% compared with one year ago, the Los Angeles Times reports. The insurer cited lower enrollment and rising health care costs as reasons for the drop.
WellPoint -- the second-largest insurer in the U.S. -- oversees Anthem Blue Cross in California, as well as plans in 13 other states.
WellPoint reported a net income of $856.5 million over the three-month period ending on March 31, compared with a net income of $926.6 million in Q1 2011.
According to WellPoint, revenue grew by 4% to $15.42 billion during Q1 2012. The insurer reported a 2% drop in overall enrollment to 33.7 million during the quarter.
WellPoint said medical claims costs increased by 5% to $11.77 billion during the quarter. It attributed most of the growth to rising health care costs.
In addition, the insurer said it had higher-than-expected claims from a Medicare plan in Northern California (Terhune, Los Angeles Times, 4/26). In January, WellPoint reported that the plan drew more customers with higher risk profiles who generated more in claims than the premiums they paid. The insurer said the plan was discontinued on Jan. 1 (California Healthline, 1/27).
According to the Times, the plan hurt the company's earnings and shook investor confidence in the company.
WellPoint CEO Criticizes Proposed Ballot Measure
On a conference call with analysts and investors, WellPoint CEO Angela Braly criticized a proposed ballot measure that would give California's insurance department the authority to reject rate increases that it deems excessive (Los Angeles Times, 4/26).
Patient advocates and lawmakers continue to rally support for the proposed ballot measure.
In February, Sen. Dianne Feinstein (D-Calif.) endorsed the measure in an email to more than two million registered California voters. Feinstein urged voters to sign petitions in support of the measure, which needs 505,000 signatures to qualify for the November ballot (California Healthline, 3/28).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.