Anthem Q3 profit hampered by drop in ACA exchange membership

Anthem saw its net income increase in the third quarter of 2015, even as the payer lost nearly 70,000 members from the individual exchanges.

The Indianapolis-based payer reported third-quarter revenue of nearly $19.8 billion, an increase of about 7.6 percent compared to the same period of 2014. Anthem said the growth in revenue was attributable to premium increases and higher enrollment in the Medicaid and commercial self-funded businesses. However, those increases were partially offset by a decline in local group fully insured and individual enrollment.

"Individual insured business membership continues to lag our expectations this year, and we have seen the volume and related margin pressures weighing on our profit contributions," said Anthem President and CEO Joe Swedish on Wednesday.

Individual exchange membership fell by 69,000 lives to 824,000 members in the third quarter.

However, Mr. Swedish has a positive outlook for the future. "While we are disappointed with the near-term enrollment picture, we believe we have the right medium- to long-term strategy for the exchanges and will continue to target sustainable pricing in our markets," he said. "Over time we believe we are well positioned for growth as this market stabilizes to a more sustainable level."

Anthem Executive Vice President and CFO Wayne DeVeydt said the company expects 2016 to be another challenging year for individual enrollment. He echoed much of what Mr. Swedish said regarding unsustainable pricing by some market participants.

Anthem reported net income of $654.8 million for the third quarter of 2015, up from $630.9 million in the same period a year ago.

Regarding its pending acquisition of Cigna, both Anthem and Cigna have shareholder meetings scheduled for Dec. 3 to approve the acquisition.

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