Decreased use improves Q3 profits for top insurers

Several of the nation's largest health insurers--WellPoint, Aetna, and Humana--reported better-than-expected third-quarter earnings, largely because of a decrease in healthcare services, according to the Washington Post.

The utilization slowdown could ultimately be a good thing as the nation grapples with bringing runaway medical spending under control. But experts could grow concerned if it leads, for instance, to Americans cutting back on preventive visits and immunizations, which carry an upfront cost but wind up decreasing spending in the long run, the Wall Street Journal reports.

Aetna CFO Joe Zubretsky said use fell compared with last year in several categories, including inpatient and ambulatory care, possibly because the economy has forced people to put off discretionary or non-urgent care to save money. "We are assuming that utilization comes back to some normal level in the future," he told the Post.

Cigna said growth in outpatient and professional healthcare services was slower than it expected. But people sought out preventive care and maintained their prescriptions during the quarter, so CEO David Cordani told the Post he didn't see signs of "inappropriate" care rationing.

Humana CFO Jim Bloem said the insurer is seeing slightly shorter hospital stays and less intensive or shorter procedures that he attributes in part to better care management, Bloomberg Business Week reports.

"In general, utilization is not in and of itself falling off the charts," said Wayne DeVeydt, WellPoint's CFO. "It's more a function of what you saw last year being abnormally high and this year being normal."

Third quarter results for the insurers are:

  • WellPoint (NYSE: WLP) earned $739.1 million, or $1.84 a share compared with $730.2 million, or $1.53, for the same period the previous year--a 1.2 percent increase in net income.
  • Aetna (NYSE: AET) earned $497.6 million in profit, or $1.19 a share, up from $326.2 million, or 73 cents, last year. Net income rose 53 percent.
  • Humana (NYSE: HUM) earned $393.2 million, or $2.32 per share, up from $301.5 million, or $1.78 per share, a year earlier. Revenue rose 9 percent to $8.42 billion.

To learn more:
- read the Bloomberg Business Week article
- see the Washington Post story
- read the Wall Street Journal article

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