The nation’s largest insurance companies appear to be jockeying for position as more provisions of the health care reform law begin to take effect. Dealing with uncertainty seems to be the main concern of top execs.
Profits overall look healthy but companies are shuffling the leadership deck in an effort to generate innovative ideas to keep revenues rolling in.
Two of the biggest insurers reported fourth quarter profits this week and came out on opposite ends of the spectrum. UnitedHealth Group, the biggest company by sales, saw fourth quarter net income jump 10% to $104 billion, beating analysts’ estimates.
Medicaid and Medicare enrollment both increased, and the early mandates of the new health reform law proved to be not as costly as UnitedHealth officials first thought, according to Bloomberg News. In addition, health care access has been down during the recession as people delay care even if they have coverage.
UnitedHealth, the parent company of Optum Behavioral Health Solutions, began the new year with a shakeup of its top executives.
At the other end of the scale, WellPoint, the biggest insurer by enrollment, saw its fourth quarter profit plunge 80% compared to the fourth quarter of 2009. The steep drop was attributed to the 2009 sale of a pharmaceutical benefits subsidiary, which boosted the bottom line a year earlier.
Still, even after adjusting for the sale, WellPoint’s net income in the fourth quarter was down 2.1%. The Hartford Courant reports that the company has logged a steady decline in enrollment, with 33.67 million covered lives on December 31, 2009; 33.47 million on September 30, 2010; and 33.32 million on December 31, 2010.
A story in Thursday’s Wall Street Journal reported that WellPoint will pursue diversification this year and will actively seek new acquisitions.
Wellness programs, which focus on the healthy, top the agenda. Chief financial officer Wayne DeVeydt told the Journal: “There is a lot of new space that is out there. We don’t see the health-insurance market going away … but at the same time here’s how we’re going to diversify out of our core, focus on the healthy, health [information technology] and a better consumer experience.”
Magellan Health Services, which will announce fourth quarter earnings on February 24, also brought in new leadership for its behavioral health business this week. Keith Dixon comes to Magellan from CIGNA Corporation, where he spent the bulk of his time as president of CIGNA Behavioral Health, from 1997 to 2006.
Prior to that, Dixon was president of United Behavioral Health, which is now Optum Behavioral Health Solutions.