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Higher medical bills hit health insurer
Source: Agencies |
July 28, 2009, Tuesday
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Print Edition
Print Edition
HEALTH insurer Aetna Inc said yesterday its profit fell 28 percent in the second quarter due to higher medical expenses in its commercial business.
The United States company said it earned US$346.6 million, or 77 cents per share, compared with US$480.5 million, or 97 cents per share, a year earlier. Adjusted earnings per share were 68 cents. Revenue grew 11 percent to US$8.67 billion from US$7.83 billion.
Aetna said its medical benefit ratio, which measures the portion of premium dollars spent on providing care, rose to 86.8 percent from 81.9 percent a year ago.
Premium revenue grew 12 percent and medical membership was flat at 19.1 million.
Aetna said commercial medical costs increased due to the use of more expensive services, and more tests and procedures per visit. That led to higher costs for emergency room, urgent care, laboratory and preventive services.
Aetna said its prices did not fully account for the higher costs, and said health-plan providers are changing their behavior due to the recession.
It cut its annual profit forecast for the second time in two months. The company now expects to earn between US$2.75 to US$2.90 per share. On June 2, it lowered its profit estimate to a range of US$3.55 to US$3.70 per share, also because of greater commercial medical costs and lower Medicare revenue.
Aetna expects to spend between 84 and 84.5 percent of its commercial premium revenue on providing medical care.
The Wall Street Journal reported yesterday that Aetna is planning to sell its pharmacy benefits management business, which had about 11.2 million members at the end of the second quarter.
According to the report, independent pharmacy benefits managers CVS Caremark Corp and Medco Health Solutions Inc have looked into buying the business.
The United States company said it earned US$346.6 million, or 77 cents per share, compared with US$480.5 million, or 97 cents per share, a year earlier. Adjusted earnings per share were 68 cents. Revenue grew 11 percent to US$8.67 billion from US$7.83 billion.
Aetna said its medical benefit ratio, which measures the portion of premium dollars spent on providing care, rose to 86.8 percent from 81.9 percent a year ago.
Premium revenue grew 12 percent and medical membership was flat at 19.1 million.
Aetna said commercial medical costs increased due to the use of more expensive services, and more tests and procedures per visit. That led to higher costs for emergency room, urgent care, laboratory and preventive services.
Aetna said its prices did not fully account for the higher costs, and said health-plan providers are changing their behavior due to the recession.
It cut its annual profit forecast for the second time in two months. The company now expects to earn between US$2.75 to US$2.90 per share. On June 2, it lowered its profit estimate to a range of US$3.55 to US$3.70 per share, also because of greater commercial medical costs and lower Medicare revenue.
Aetna expects to spend between 84 and 84.5 percent of its commercial premium revenue on providing medical care.
The Wall Street Journal reported yesterday that Aetna is planning to sell its pharmacy benefits management business, which had about 11.2 million members at the end of the second quarter.
According to the report, independent pharmacy benefits managers CVS Caremark Corp and Medco Health Solutions Inc have looked into buying the business.
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