Insurers Post Strong Earnings, But Investors Wary Of Health Law Rules

Insurers reported high earnings Wednesday, but investors remain worried about the possible effects of health overhaul-related regulations. The Associated Press reports that Aetna's "third-quarter net income jumped 53 percent on lower benefits and expenses. The medical [loss] ratio, which measures the percentage of premiums spent on medical costs, fell to 81.8 percent from 85.6 percent." Despite that strong showing, investors are wary of health overhaul rules that "will require insurers to spend a certain percentage of the premiums they collect on medical care or provide customer rebates, beginning in 2011. Details of this medical loss ratio provision are still being ironed out, but investors worry they will cause insurers to leave certain markets where they can't meet minimum standards" (11/3).

Bloomberg: The Wellpoint story is similar. "WellPoint Inc., the biggest U.S. health insurer by enrollment, raised its earnings forecast as lower medical costs boosted third-quarter profit 1.2 percent. Net income rose to $739.1 million, or $1.84 a share, from $730.2 million, or $1.53, a year earlier, Indianapolis-based WellPoint said in a statement today." But, next year, analysts said, the medical loss ratio rules may mean such profits are "unsustainable" (Nussbaum, 11/3).