Aetna (NYSE: AET) and WellPoint (NYSE: WLP) continued the trend of health insurers reporting better-than-expected earnings and raising their 2011 profit forecasts. First quarter earnings rose 4 percent for Aetna and 5.7 percent for Wellpoint.
Aetna reported a profit of $586 million, or $1.50 a share, up from $562.6 million, or $1.28 a share, a year earlier. WellPoint reported a profit of $926.6 million, or $2.44 a share, compared with $876.8 million, or $1.96, a year earlier, the Wall Street Journal reports. WellPoint spent 82.1 percent of revenue from premiums on care in the quarter, while Aetna spent 79.2 percent.
WellPoint enrolled 875,000 new members since the end of 2010, with 727,000 members in national employer-funded plans. Its membership boost was also facilitated by increases in Medicare and Medicaid, including a gain of 52,000 Medicaid customers under a new contract with Indiana, according to Bloomberg.
Aetna has been benefiting from higher rates while also being more assertive on hospital pricing and reimbursements and removed from its networks some hospitals that have balked at rates, notes the WSJ. It also said claims left over from previous quarters came in lower than expected due to lower-than-projected care use, and that helped its first quarter performance, the Associated Press reports.
"I would not say reform was a big plus for insurers, just that its negative impact appears less than feared," Jason Gurda, an analyst at Leerink Swann & Co, told Bloomberg.