2. A month ago, the insurer surprised investors when it said it expected double-digit rate increases in 2015 – even after the company in its previous January earnings said the early enrollment mix had been meeting the company’s expectations.
“On a year-over-year basis on our exchanges, and it will vary by carrier, but all of them will probably be in double-digit plus,” a company official reportedly said last month.
Company officials were more cagey about expectations Wednesday. Several analysts asked about expected rate increase for next year, including one analyst who asked specifically whether the insurer expects double-digit rate increases and if it felt any pressure to keep down rates after a meeting with President Obama this month.
“Rates will vary by market, but given this information, they may not be what we thought from previous reports,” Wellpoint said Wednesday in an e-mailed statement.
Wellpoint officials didn't specifically say if they expected double-digit increases, offering a more nuanced answer this time. That’s “not an easy one to answer,” said chief executive Joe Swedish, explaining that the rate increases will vary between markets and products. That sounds similar to what Aetna chief executive Mark Bertolini said last week, when he predicted increases ranging from very low single digits to double-digits.
But WellPoint officials did talk about what's driving premium increases. They pointed to a 6.5 percent increase in medical trend this year, which is industry jargon for an increase in health-care costs. They also said an increase in the Affordable Care Act tax on insurers, and the cost of new hepatitis C treatments, will factor into rate increases.
I’ve asked a Wellpoint spokeswoman whether the company is still predicting double-digit hikes and will update if I hear back.
3. What could have changed in the past month? Toward the end of enrollment, the average age of enrollees came down in a “meaningful fashion,” said chief financial officer Wayne DeVeydt. Wellpoint said it's seeing other positive enrollment trends. People are generally flowing to "bronze" and "silver" health plans, as the company expected. The company’s 2014 expectations for enrollment have pretty much been met. “We hit the sweet spot,” he said.
4. The company said it doesn’t know yet exactly how many new members it has, nor how many of the new enrollees were previously uninsured. About 90 percent of customers signing up in exchange plans have paid, but that figure doesn’t include those who signed up near the end of enrollment.
5. Overall, the company was bullish on its exchange strategy. Wellpoint likes the mix of customers it has so far, and they're buying the products the company expected them to. Wellpoint, once a major Obamacare critic, bet big on the exchanges. It spent $550 million over the past two years in preparation for the new marketplaces, Swedish said Wednesday morning.