WellPoint profits rise 51 percent amid scrutiny on several fronts

WellPoint, the U.S. health insurer with the biggest membership, announced Wednesday that its first-quarter earnings rose 51 percent compared to last year and were boosted by a mild flu season, The Wall Street Journal reports. Medical membership fell 2.1% to 33.8 million as of March 31 from a year earlier but rose by 165,000 during the quarter. The company trimmed its year-end medical membership projection to 33.1 million from 33.3 million." WellPoint Chief Executive Angela Braly said the company had reversed its trend of shedding members since 2008 despite continued high unemployment rates (Brin, 4/28).

Los Angeles Times: "The big increase in earnings comes as the Indianapolis company faces scrutiny in California and other states over premium rate increases of as much as 39% for customers with individual policies." The rate hikes are now on hold, pending a forthcoming independent review by an actuary appointed by the state's insurance regulator. "On Wednesday,… Braly said the company is 'off to a good start in 2010,' but added that the California postponement — set to enter its third month — has been costly" (Helfand, 4/28).

Reuters: The earnings announcement also comes on the heels of a news story that said WellPoint actively sought reasons to kick women with recent breast cancer diagnoses off its roles, prompting lawmakers to call for an end to the practice, known generally as rescission. The health law would ban the practice anyway in September, except in cases of fraud. WellPoint said Tuesday it would end the practice, but Braly denied the report's accuracy. Reuters writes, "Reuters stands by its story, it has said" (Krauskopf, 4/28).

Bloomberg BusinessWeek: "WellPoint in January reclassified call centers staffed by nurses, disease management and wellness programs used by its customers as health benefits, instead of administrative expenses, in anticipation of language in the health-care law requiring health plans to spend at least 80 percent of their premiums on medical care." Investors remain concerned that that requirement will hurt insurers' profits, causing shares to sink since the health law passed. However, WellPoint confirmed its earlier estimate that it would spend 84.3 percent of its premiums on medical care this year (Tirrell and Nussbaum, 4/28).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.