Health insurer WellPoint Inc., parent of Anthem Blue Cross Blue Shield of Connecticut, said today its third-quarter profit fell 11 percent as enrollment in employer-sponsored insurance plans continued to slip while more U.S. workers lost their jobs.
The largest publicly traded health insurer based on enrollment said it took a big hit in local group business, which provides fully insured plans for small businesses. Membership there sank 6 percent compared to the same quarter in 2008.
Enrollment in Indianapolis-based WellPoint’s commercial business, a category that encompasses mostly employer-sponsored group coverage, dropped 3.5 percent. Total medical membership at quarter-end was 33.9 million, a decrease of 4.2 percent from the prior year.
The recession has hurt health insurers because employers have cut jobs and reduced the number of people covered by employer-sponsored group health insurance. Some companies, especially small businesses, have dropped health coverage entirely.
Employer-sponsored health coverage is “the bread and butter business” for insurers, BMO Capital Markets analyst Dave Shove said in a recent note. He said the business does not come with the risk of government intervention like reimbursement cuts.
WellPoint competitor UnitedHealth Group Inc. said last week enrollment in plans sold to employers fell 6 percent for the second-straight quarter.
In the third quarter, WellPoint earned $730.2 million, or $1.53 per share. That’s down from $820.7 million, or $1.60 per share, a year earlier.
The results include an impairment charge of 28 cents per share, partially offset by investment gains of 3 cents per share. Adjusted earnings were about $1.78 per share.
Total revenue, which includes investment income, rose 3 percent to $15.4 billion.
Analysts surveyed by Thomson Reuters expected, on average, a profit of $1.37 per share on $15.15 billion in revenue. Analysts typically exclude one-time charges from their estimates.
WellPoint’s benefit expense ratio, an important statistic that shows the percentage of premiums used to pay claims, fell to 81.1 percent from 82.5 percent.
For the full year, the company expects to earn $5.06 to $5.12 per share, including net investment losses of 52 cents per share and the third-quarter impairment charge of 28 cents per share.
The adjusted earnings forecast is $5.86 to $5.92 per share, up from a previous range of $5.60 to $5.66 per share.
Analysts currently expect WellPoint to post an annual profit of $5.67 per share.
Indianapolis-based WellPoint operates Blue Cross Blue Shield plans in 14 states, including Connecticut, California, New York and Ohio. (AP)
