WellPoint could see $20B revenue boost from reform law

WellPoint's revenue could jump by $20 billion come 2016 as a result of the healthcare reform law, particularly Medicaid expansion and health insurance exchanges, according to the insurer's second-quarter earnings report released last week.

Growth opportunities created by the reform law are "more compelling than we have seen in several years," WellPoint CEO Joseph Swedish told analysts, according to the Associated Press. The insurer projected that expanding Medicaid and selling plans on exchanges could help increase its revenue from $70 billion to $90 billion.

That's because WellPoint will be one of the biggest players on the online marketplaces, selling policies in the 14 states where it operates Blues plans; and about seven of those states are expanding Medicaid, giving the insurer a chance to increase enrollment by millions of people, Reuters reported.

Meanwhile, WellPoint estimated it could lose members as small businesses stop offering insurance to workers who are eligible for subsidized coverage on exchanges. "We continue to see small group attrition accelerate even more as we get to the back half of the second quarter," WellPoint Chief Financial Officer Wayne DeVeydt told analysts, Kaiser Health News reported. "And we expect that to continue."

DeVeydt attributed the small business loss to uncertainties around exchanges. "What we are seeing is that more of the small group employers today still can't make a decision on choices yet because those choices are not readily available in the market until the exchanges are fully up and running," he explained.

WellPoint's earnings rose 24 percent to $800.1 million in the second quarter of this year, up from $643.6 million a year ago, while its operating revenue increased 16 percent to $17.6 billion.

To learn more:
- here's the WellPoint earnings report
- read the Associated Press article
- read the Reuters article
- see the Kaiser Health News article

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