After yesterday's announcement that health insurance giant WellPoint exceeded financial expectations by earning $877 million in net income for the first quarter of 2010, up 51 percent from the $580 million earned in the first quarter a year ago, CEO Angela Braly made one thing clear: the company could have earned more.
Braly pointed to the postponement of rate increases in California as one of the underlying causes for profits not earned. The controversial rate hikes would have been as high as 39 percent for some Anthem Blue Cross individual policy holders.
"Due to this delay, our individual business in California is performing below expectations this year and lost money in March," Braly said, according to the Los Angeles Times. "The premiums we charge must be sufficient to cover the underlying cost of care."
Shares of WellPoint were listed at $1.96, beating analysts estimated averages of $1.67 per share. In the first quarter of 2009, WellPoint's net income per share was listed at $1.16, which equaled roughly $228 million in net investment losses. Medical enrollment also grew by 165,000 in the first quarter according to the company's financial report, boosting overall enrollment to 33.8 million.
The company's benefit expense ratio--the percentage of collected premiums spent on medical care for customers--decreased slightly to 81.8 percent this quarter, down from 82.5 percent in the first quarter of 2009. Operating revenue also decreased slightly, from $15.3 billion in last year's opening three months to $14.9 billion for this quarter, down 2.8 percent.
Sen. Dianne Feinstein (D-Calif.) condemned WellPoint for the "major hardship" it caused for "millions of average Americans."
"WellPoint's actions are a textbook example of the profits-above-all-else Wall Street mentality," Feinstein said, according to the Times.