Health insurer Aetna (AET) said it would make more money than originally anticipated thanks to “attractive growth” from new enrollment on public exchanges under the Affordable Care Act.
Aetna now expects its 2015 earnings per share of “at least $7.00” compared to an earlier projection of at least “$6.90” per share, according to chief executive officer Mark Bertolini who told Wall Street analysts and investors this morning he was “cautiously optimistic” about ACA growth this year.
The company said it added 600,000 new heath plan members last year on public exchanges where uninsured Americans purchase subsidized coverage under the health law. Those new members contributed to 2014 growth of an additional 1.4 million health plan members, or 6 percent growth, from 2013 bringing total enrollment of “medical members” to 23.5 million by the end of last year. The company is also seeing solid growth from its Medicare Advantage health plans thanks to the health law’s star-ratings system that rewards plans for quality improvement.
“We see a lot of opportunity,” Bertolini said in an hour-long call to discuss the company’s fourth quarter and 2014 earnings.
Bertolini said the 2014 enrollment exceeded its original expectations on margins and so far in 2015 the addition of new customers makes the public exchange business an “attractive growth opportunity.” Already, Anthem (ANTM) and UnitedHealth Group (UNH) have issued similarly optimistic 2015 outlooks, particularly when it comes to new business under the health law from public exhanges and the expanded Medicaid insurance program for poor Americans.
In the fourth quarter, Aetna reported net income of $232 million, or 65 cents a share, compared to $368.9 million, or $1 a share, in the fourth quarter of 2013. Operating revenue rose 12 percent to nearly $14.8 billion.
Date: February 3, 2015