First quarter earnings for many insurers reflected big adjustments to two major outside changes to the insurance landscape: Obamacare and new Hepatitis C drugs.
Many insurers saw their individual insurance rolls swell as people signed up via Healthcare.gov or the various state exchange websites. Of course, those same insurers were hit with additional fees and taxes as Obamacare came fully online, so profitability took a bit of a hit.
The cost trend was due to a big increase in spending on hepatitis C medications coinciding with Gilead Sciences' (GILD +2.11%) release of Sovaldi to the general market starting late fourth quarter 2013. This took many insurers by surprise, with UnitedHealth Group's (UNH +0.94%) Dan Schumacher saying that hepatitis C spending was "a multiple of what we expected."
Only one of the diversified insurers really seemed adequately prepared for these trends: WellPoint (WLP +1.53%). Management ran with conservative guidance, bet big on Obamacare, and controlled well for hepatitis C cost. In fact, management increased earnings guidance for 2014 despite also increasing their expectations for hepatitis C spend for the balance of the year by $100 million. Find out more in the video below, as Motley Fool health care analysts Michael Douglass and David Williamson take you through WellPoint's success and what this means for investors going forward.
