WellPoint's fourth quarter profits fell 39 percent to $335.3 million, down from $548.8 million a year earlier. Unexpectedly high Medicare claims took a toll on the insurer.
Although most insurers have benefited from low healthcare utilization, the recent trend didn't provide an advantage for WellPoint after it picked up a northern California Medicare plan covering thousands of people with expensive health issues, reported the Wall Street Journal.
WellPoint posted a $4.6 million fourth-quarter loss for its consumer business, including Medicare plans, compared to a $112 million profit a year ago. "Clearly, our consumer segment underperformed, and it was almost entirely due to the senior business," WellPoint CEO Angela Braly said on a conference call with analysts, according to Reuters.
Its Medicare problems in California cost WellPoint $150 million this year, but the company said it fixed the issue for 2012 by replacing its broader Medicare plan with more targeted local plans throughout California, Reuters noted.
By walking away from the problem market, WellPoint is prepared for some membership losses. As of Dec. 31, 2011, WellPoint had 34.3 million members--which was 104,000 fewer members than in Sept. 30, 2011--and it forecasts that number will drop by 600,000 more this year, LifeHealthPro reported.