Health plans are enjoying healthy profits across the board, reporting robust third quarter earnings.
Increased Medicare enrollment, streamlined operations and opportunities in the uninsured market are driving growth in both membership and profits.
In its most recently completed quarter of operations, Humana’s profits more than tripled, thanks to increased Medicare enrollment from the implementation of the Medicare Part D program and increased payments for Medicare Advantage managed care plans. The company’s revenues increased 48 percent to $5.65 billion for the three months ended Sept. 30.
“Our third quarter results kept us on track to increase earnings per share by approximately 60 percent over 2005,” Michael McCallister, president and chief executive officer of Humana, said in a statement.
Aetna posted a 37 percent increase in revenues, compared with last year’s third quarter. Its recent results reflect a reversal of fortune for its stock price, which can be attributed to aggressive marketing, share repurchase and personnel reduction.
While it increased membership by 700,000 in the past year, Aetna shed 650 employees in October to reduce administrative costs. Premium and fee rate increases helped the company bolster its earnings.
Cigna, the nation’s fourth largest health insurance carrier, also showed a turnaround. Its third quarter net income rose by 15 percent, thanks to a 2.8 percent increase in membership. The June 2006 acquisition of HRG, a provider of low-cost health plans that offer limited benefits, was a strategic move – the company hopes to use HRG to tap into the uninsured market.
UnitedHealth reported a 23 percent increase in earnings per share in the third quarter, compared with the same period in 2005. The company increased its Medicare Part D membership to approximately 5.75 million, more than any other payer’s Medicare prescription plan. After recently posting losses on this business line, UnitedHealth posted an operating profit on Medicare Part D revenue of $1.4 billion.
The signing of four new Medicaid contracts was a key reason behind a 27 percent increase in profit for WellPoint, according to its third quarter earnings report. With approximately 2 million members under its care, the company already is the nation’s largest operator of Medicaid plans.
As the second largest health insurance carrier in the country and operator for Blue Cross and Blue Shield plans in 14 states, WellPoint was able to cut medical costs relative to premium revenue in local markets. It expects to increase its growth in earnings per share for 2007 by 15 percent.