WellPoint plans exchange plan push

By Allison Bell

July 24, 2013

WellPoint Inc. is planning to spend millions of dollars, especially in California, to support marketing of its new exchange plans.

Joseph Swedish, the company's chief executive officer, and Wayne Deveydt, the chief financial officer, made that point today during its quarterly earnings call.

WellPoint runs a Blue Cross plan, a Blue Shield plan or both in 14 states. The company has filed applications to sell individual "qualified health plans" through exchanges in 140 "rating regions" in those states, and expects to "selectively participate in several small-group exchanges," Swedish said.

Deveydt noted the company is reallocating about $50 million in cash into care for the "chronically ill and high-need patients."

Some of the cash will support growth in a company unit that administers self-insured plans, but much of it will go toward "some of the growth we expect in the exchanges, and how we plan to further market and advertise our exchanges," Deveydt said.

Swedish said WellPoint believes gaining market share will depend partly on "educating on the exchanges and getting those lives to enroll."

At another point, Deveydt said, "We think, in terms of the uptake on the exchanges, that it's going to be largely driven by a combination of what our efforts are to educate the market regarding the exchanges and what the states are doing to educate the markets."

California will have a strong exchange marketing program, "so, there's a state where we see a combination of their marketing efforts coupled with ours that we think is a promising formula for exchange growth," Deveydt said.

WellPoint is reporting $800 million in net income for the quarter on $18 billion in revenue, up from $644 million in net income on $15 billion in revenue for the second quarter of 2012.

The company ended the quarter providing or administering medical coverage for 36 million people, 6.3 percent more than the year before.

Also during the conference call:

- Company executives said the WellPoint QHPs will offer narrower provider networks than comparable traditional commercial plans. But Swedish said WellPoint thinks its networks will be big enough to offer enrollees adequate access and remains somewhat skeptical about how well some competitors' narrower networks will work.

- WellPoint sees some signs individuals who need coverage will wait until 2014 to buy coverage.

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