WellPoint, the nation’s largest health insurer reported last week that its Q4 profits fell 61% to $331 million, or 65 cents per share.
The news provided a fitting denouement to a brutal year for the company which covers more than 35 million Americans. It came as no surprise since in mid-January the company announced that Q4 investment losses were going to approach $350 million.
Still there was some truly disquieting news: WellPoint saw enrollment declines versus Q3 in almost every kind of health plan it offers, including plans for individuals, employers and Medicare recipients.
Chief Executive Angela Braly rationalized that nearly half the 288,000 covered lives lost by WellPoint in Q4 were caused by rising unemployment and the associated loss of employee benefits.
That’s better than losing customers to other plans, but it doesn’t bode well for WellPoint and its competitors for the next several quarters.
With the Economic Crisis now in full bloom, WellPoint chose to provide vague guidance for 2009, saying it expects “low-single digit” percent increases in earnings per share. It promised to offer sharper targets at an investor conference later this month, according to the Wall Street Journal.
“Economic conditions will continue to deteriorate and unemployment will continue to increase,” Braly sighed to analysts on a phone conference. “This will impact commercial membership in 2009.”
WellPoint does business in 14 states under the familiar Blue Cross Blue Shield brand. In several of these states, unemployment is predicted to rise above 10%. California is WellPoint’s largest market. Already, its unemployment rate stands at 9.3%.