Health plan profits are falling, and given the trends in the U.S.
economy and healthcare costs generally, this trend is likely to linger
for a while. And if falling profits remain a fact of life for the
plans, it’s likely to spawn a series of plan selloffs which will bring
further consolidation to an industry that has already seen lots of
large mergers in recent years, observers note. For the short term,
some–like WellPoint–have kept their bottom lines healthy by raising
premiums, but they can only do that for so long before employers drop
them, experts say.

With returns on their investments dropping,
medical costs climbing and membership falling, publicly-traded health
plans have taken it on the chin. Though WellPoint did see an increase
in earnings per share, every publicly-traded health plan saw profits
fall in the third quarter. Many are telling investors to continue to
expect bad times. For example, after third-quarter profits fell 39
percent, partly due to investment losses, Aetna has told its investors
that it can’t commit any longer to its long-term operating earnings per
share growth goal of 15 percent.

So which plans will likely sell
out to survive? Stock analysts say Los Angeles-based Health Net and
Bethesda, MD-based Coventry Health Care are strong candidates, as
they’re struggling more than some of their competitors.

Topics: Health Insurance |

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