Obamacare-related costs were said to be behind the profit plunge at Wellpoint and Humana, but Wellpoint sees the new exchanges boosting its earnings for the full year. Fred Katayama reports.
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Costs stemming from Obamacare were said to cause profits to decline at two leading health insurers, but President Obama's healthcare reform law could help boost earnings later on. Humana said investments in its new healthcare exchanges and hepatitis C drug treatments bit into profits. That offset the huge gains in revenue from expanded membership in its Medicare programs.
The high-flying stock, up 24 percent this year, lost ground in early trading.
Increased membership also boosted revenue at Wellpoint. It expects to add many more members and cut costs, so it hiked its earnings forecast for the full year. A Wellpoint spokesperson said the added members will come from the public exchanges and the expansion of Medicaid programs. Wellpoint is being closely watched because it's one of the biggest providers of insurance under the exchanges with 769,000 members.
Cowen analyst Christine Arnold said, "This looks like the best quarter thus far reported by a managed care company with balance sheet preserved..."
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