WELLPOINT: Will Hike Rates To Finance Expansion
"WellPoint Health Networks Inc. expects to raise health-insurance rates in California by 3% to 5% this year," Bloomberg News/Los Angeles Times reports. Wellpoint Chairman and CEO Leonard Schaeffer said the increases are justified by two years of contained health care inflation. With nationwide costs stable at about 13.6% of GDP, "[e]mployers realize they have had below-average health inflation, so they're just a bit more flexible," Schaeffer said. He added that rate hikes in other markets will probably average 7-10% to offset cost increases of 6-8%.
On A Roll
Schaeffer's comments followed an announcement Tuesday that Wellpoint's "fourth-quarter profit from operations rose 25%," the result of increased membership, price hikes and cost cuts. The company recently bought portions of Massachusetts Mutual Life Insurance Co. and John Hancock Mutual Life Insurance Co. and "is looking to grow through acquisitions" in additional markets such as Texas, New York, Georgia, Illinois, Connecticut, Ohio, Virginia and New Jersey. "Should other opportunities ... come along, we will be making acquisitions in the strategic locations ... outside of California," Schaeffer said. Wellpoint's share price on the New York Stock Exchange closed yesterday at $59.19, up $1.88 from Tuesday (2/19).