INDIANAPOLIS (AP) - WellPoint's fourth-quarter earnings tumbled 68 percent, as customers of the nation's second largest health insurer raced to use their coverage last fall before it became cancelled under the health care overhaul.
INDIANAPOLIS (AP) — WellPoint's fourth-quarter earnings tumbled 68 percent, as customers of the nation's second largest health insurer raced to use their coverage last fall before it became cancelled under the health care overhaul.
The Indianapolis company said Wednesday that its medical expenses spiked 18 percent to $14.58 billion due in part to higher use of individual policies in advance of the overhaul's coverage expansions, which unfolded this year.
Insurers typically see a rise in use at the end of each year as patients pay up their deductible, or the out of pocket cost before most coverage starts, and then use their coverage before that deductible renews in the new year. But WellPoint said it also saw a jump in use from patients who wanted to take advantage of their policies while they still had them.
Millions of consumers nationwide received notices from their insurers last fall that their plans were being canceled because they didn't meet coverage requirements established under the overhaul, the federal law that aims to cover millions of uninsured people.
Complaints over these notices eventually led President Obama to announce that people could keep their individual policies if state regulators approved.
But WellPoint spokeswoman Kristin Binns said health care use started climbing after customers received their notices and before Obama made that announcement in November. The insurer runs Blue Cross Blue Shield plans in 14 states, and its biggest market, California, did not allow for plans to be continued. The insurer did not say how many of its customers received cancellation notices.
Nationwide, The Associated Press has estimated that a total of at least 4.2 million people received the notices. The overhaul helped many of them find new coverage by providing income-based tax credits that customers can use to buy a plan on state-based insurance exchanges that also started last fall.
Overall, WellPoint earned $148.2 million, or 49 cents per share, in the quarter that ended Dec. 31. That's down from $464.2 million, or $1.51 per share, in the final quarter of 2012. Earnings excluding one-time items totaled 87 cents per share.
Analysts expected 86 cents per share, according to FactSet.
Operating revenue jumped 16 percent to $17.65 billion. That excludes investment gains or losses. Analysts expected $17.8 billion.
WellPoint said results also were affected by a charge it booked for unloading its 1-800-Contacts business and by a higher income tax expense.
The insurer's stock dropped $1.05 to $83.25 in early premarket trading.