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Coventry, Humana, and Kaiser post Q3 gains; Aetna's profits fall

Three major U.S. managed care companies posted third-quarter gains, while profits fell for the nation's largest health insurer.

Coventry Health Care Inc., Humana Inc., and the only nonprofit in the group, Kaiser Permanente, all reported increased earnings, while Aetna Inc. posted a 14 percent loss.

Coventry, based in Maryland, has 1.6 million members in the Midwest, Mid-Atlantic, and Southeast. The company posted net income of $15.4 million, or 23 cents a share. This figure is up from $11 million, or 17 cents a share, for the same period a year earlier. Coventry officials attribute the 40 percent increase to strong membership growth.

Kentucky-based Humana reported a gain of $23 million, or 14 cents a share, up from $22 million, or 13 cents a share, from a year ago. The increase came even as Humana's membership dropped 7.2 percent to 2.6 million members due to the impact of premium increases on member retention.

After three consecutive years of losses, Kaiser earned a hefty $180 million in its third quarter. By contrast, Kaiser lost $29 million in the same quarter last year. Kaiser credits the turnaround to divesting itself of its money-losing operations on the East Coast and cutting administrative costs, says Kaiser spokesperson Beverly Hayon. Kaiser has 8 million members in 11 states and the District of Columbia.

Aetna, based in Hartford, Conn., posted third-quarter earnings of $158 million, or $1.10 cents per share, down from $184 million, or $1.21 per share, for the same period a year earlier. Aetna officials say the loss reflects lower profits at its managed care division, Aetna U.S. Healthcare in Blue Bell, Penn., which serves 19.2 million members. Officials attribute Aetna U.S. Healthcare's 41 percent decline in operating earnings (to $77 million in the third quarter, down from $131 million the previous year) to rising medical costs for both its commercial and Medicare HMO products.

Aetna Chairman and CEO William H. Donaldson says the company remains committed to its plan to exit approximately half of its Medicare HMO markets on Jan. 1, 2001. He says the move, which will effect 340,000 Aetna policyholders, will result in substantial improvement in the financial results of Aetna's Medicare HMO business.

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