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Thursday, July 28, 2011

WellPoint Links Dip in Profits to Calif. Medicare Enrollees

WellPoint recently released a financial report showing that the health insurer's profit dropped by 3% in the second quarter of 2011, partly because of higher-than expected medical costs among Northern California seniors. WellPoint said it earned $701.6 million during Q2 2011, down from $722.4 million during the same period last year. The company noted that it experienced an 8.5% increase in medical claims during Q2 2011, driven largely by Northern California policyholders with Medicare Advantage plans.

Reader Comments:
  • 3
  • 08/12/2011
  • Robert Forster

I have a slightly different perspective than both Carol and Hatti. Medicare Advantage is medicare benefits (plus) administered by private companies in various business models. Demographics Hatti shows lower income people gravitate to it from traditional Medicare since it covers Part B and some part D--this is absolutely true in rural America. Margin or profit drops can be due to many things: more health care costs expended, unexpected administrative costs, less total premium given to plan to administer for governement (easy to happen since payment is hooked to disease risk in the population insured). Any one time unexpected administrative cost would lower the profit or margin for the year. More data is necessary to know just what happened. IT could even be enrolled population loss, but Advantage continues to grow--more benefits than traditional Medicare in general for lessor premiums.

  • 2
  • 07/28/2011
  • Hatti Hamlin

I think Carol Frandsen may be missing the point: Medicare Advantage is not a program designed for lower income people, but probably more likely to be taken by higher income seniors. The dip in profits at Wellpoint has to do with usage and nothing to do with the income level of the participants!

  • 1
  • 07/28/2011
  • Carol Frandsen

Well, I guess they will just drop Medicare Adantage before open enrollment. Would not want them to make only 700mil. Those dang lower income people.



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