INDIANAPOLIS (AP) — WellPoint Inc.'s second-quarter net income fell 3 percent as Medicare Advantage expenses climbed, and Wall Street punished the health insurer's stock in Wednesday trading even though the company raised its 2011 earnings forecast for the second time this year.
The Indianapolis insurer said medical claims — its largest expense — rose 8.5 percent to $11.92 billion in the quarter, as costs for its Senior business have come in "significantly higher" than it expected this year. This was due mainly to its Medicare Advantage enrollment in California.
Medicare Advantage plans are privately run versions of the government's Medicare program. WellPoint said some of its plans were hurt by adverse selection, which involves healthy members dropping coverage and leaving a greater concentration of people who generate more in claims than they contribute in premiums.
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