Aetna, Humana see big income, profit dips

In reporting their second quarter earnings, both Aetna and Humana saw big dips in income and profit, respectively.

Aetna's second quarter earnings dropped 15 percent, but the third-largest health insurer still posted higher revenue from increased premiums and new acquisitions. Net income for the quarter was $457.6 million, down from last year's $536.7 million. Aetna's revenue increased to $8.8 billion from $8.3 billion last year, primarily because of higher enrollment in its Medicare Advantage plans, the acquisition of Genworth Financial's Medicare Supplement business and higher premiums for employer-based plans, the Hartford Courant reported.

Aetna also posted a 14 percent growth in its Medicare business, and its overall membership increased by more than 100,000 members from the first quarter to now total 18 million members, Reuters reported.

"When you have a very well-balanced portfolio with great diversification across product segments and geographies, I think we have a very, very effective way of managing the portfolio to optimum results," Aetna Chief Financial Officer Joe Zubretsky told the Associated Press.

Meanwhile, Humana fared a bit worse as it reported a second quarter profit of $460 million, down 23 percent from $356 million a year ago. The insurer said higher Medicare Advantage costs and increased healthcare use, including wellness and preventive care visits, drove the profit decline, according to The Wall Street Journal.

"Nobody's happy with where we are at this moment, but this company still does understand what is going on in Medicare," Humana CEO Michael McCallister said on a conference call, Bloomberg reported. "I'd rather be us than anybody else in this space."

But the insurer is confident it will return to its normal 5 percent profit margin next year. "Our company's strategy is sound," McCallister added. "We believe the steps we are taking to address certain short-term operational challenges will put us back on the path for sustainable earnings growth."

To learn more:
- read the Hartford Courant article
- see the Associated Press article
- check out the Reuters article
- read the Wall Street Journal article
- see the Bloomberg article

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