Dive Brief:
- On Tuesday Aetna Inc. announced its expectations that medical costs will hit the high end of its forecasts for the year. During the third quarter, the high cost of a new hepatitis C treatment and higher claims costs at mid-sized companies and individual businesses created an unexpected rise in its medical cost ratio.
- Still, Aetna's third-quarter profits rose as higher volumes (nearly 600,000 new customers from the insurance exchanges) trumped its costs. The company reported income of $594.5 million, up from $518.6 million this time last year. Revenue was up 13% to $14.7 billion for the quarter.
- The announcement confirmed some investor concerns that the end has come to years of stabilized medical spending. Shares in UnitedHealth Group and WellPoint fell, and Aetna shares dropped by 2.2%.
Dive Insight:
Aetna has announced that in light of higher costs, it is pricing premiums with the expectation that spending will increase by 50 to 100 basis points. Across the country, hospitals have reported a slight growth in use that could be based on economic growth or an increase in the number of insured patients. Aetna has said its increases are due largely to pharmaceutical costs and outpatient services. "I wouldn't say we have gotten to the point where we are drawing a conclusion that there is a widespread move upwards in medical cost trends," Aetna’s CFO Shawn Guertin told Reuters.