In the midst of plans for a controversial mega-merger with one of its chief competitors, Anthem Inc. is doing even better than expected. The health insurance giant reported a 4 percent profit increase in the third quarter, exceeding what industry analysts anticipated.
The Associated Press reports that the company attributes the profit increase to a spike in enrollment, particularly in its government-funded health plans. The company attracted 174,000 new enrollees overall, for a current total of 38.7 million customers.
The company reports that enrollment in its Medicaid plans was up 15.5 percent, while enrollment in its Medicare Advantage plans went up 2.8 percent and plans it offers federal employees went up 2 percent. The total amounted to an increase in 856,000 since last December.
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But not all was good for business. Anthem saw 70,000 leave its individual customer business, for a drop of 8.8 percent. And despite its profits, the company's overall revenue figures didn't impress investors; Anthem's stock fell by nearly $6 a share on Wednesday.
"The quarter looks a lot weaker than the headline beat would suggest since it was driven by (lower-than-expected) operating costs and taxes," Goldman Sachs analyst Matthew Borsch told the AP.
Anthem CEO Joseph Swedish attributed the loss of individual plan customers to being out-priced by competitors offering premiums that he called "unsustainable," according to Modern Healthcare.
But the enrollment trends for Anthem mirror overall trends in the health care market. The expansion of Medicaid funded by the Patient Protection and Affordable Care Act continues to attract new members and shows little sign of faltering, particularly as some states reconsider their decision to reject the expansion two years ago.
At the same time, the number of people who have bought individual insurance plans through the PPACA marketplaces has dropped, as millions of individuals struggle to pay the premiums that some say are still too high, despite subsidies.
Anthem's planned $48 billion purchase of Cigna is one of two mergers being reviewed by federal regulators. Shareholders recently approved Aetna's proposed purchase of Humana for $37 billion. Neither merger will be approved until at least early next year. Both have prompted criticism from consumer advocates and political leaders, most prominently Hillary Clinton.
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