(New throughout, updates with executive comments on Obamacare)
April 24 (Reuters) - Aetna Inc said on Thursday its first few months under Obamacare turned out better than expected as it added new members not only on the exchanges but in its traditional large corporate business.
Aetna's shares surged 5.5 percent as the company allayed some investor concern that health costs were higher than what it and competitors had planned for. It also said it beat first-quarter profit expectations as bad weather helped keep down doctor visits and medical costs.
This year, Aetna introduced health plans in 17 of the new insurance exchanges created by President Barack Obama's healthcare law nationwide, making it the largest player by number of states, ahead of even WellPoint Inc.
A rocky start to the exchanges, with technical failures and an advertising counteroffensive by Republican opponents of the Affordable Care Act, had raised fears of weak enrollment skewed toward older and sicker consumers.
Aetna, which had warned it could lose money on the insurance exchanges, said enrollment exceeded expectations at about 230,000 sign-ups. It also said the health of its new members so far appeared to match how it priced those plans. It is considering remaining in 17 markets for 2015.
The No. 3 U.S. health insurer also said membership in its corporate-sponsored plans surged by more than 400,000 people, helping quarterly profit beat Wall Street expectations and countering concerns that employers would be quick to send workers to the Obamacare exchanges.
"With one quarter down, it appears that our pricing for this year on all of our commercial business was appropriate and it appears adequate enough for us to recover the new taxes and fees that are going to be imposed on us," Aetna Chief Financial Officer Shawn Guertin said during an interview.
Aetna said the total number of Obamacare enrollees for 2014 could even swell to 450,000 as more last-minute sign-ups are processed, and as some people qualify for coverage due to changes in status. The Obama administration has reported 8 million new sign-ups in the program nationwide so far.
Aetna shares rose 5.5 percent to $72.66 and WellPoint Inc., which reports next week, gained 1.7 percent to $96.35. Larger rival UnitedHealth Group rose slightly.
"Part of the reason (Aetna) stock is reacting so well is their comments on pricing," explained Sarah James, an analyst for Wedbush Securities.
Last week, UnitedHealth said more healthy consumers and small businesses renewed their policies rather than buying Obamacare plans, making the latter less profitable. Aetna said the renewals had occurred as expected and that its pricing was on target.
Chief Executive Officer Mark Bertolini said Aetna expects to submit proposed premium rates ranging from the low single-digit to double-digit percentages or more in its Obamacare markets for 2015. Those price increases are expected to play into the political fight over Obamacare as Republican lawmakers play up its faults ahead of congressional elections in November.
HEPATITIS C DRUG CONCERNS
Aetna raised its forecast for 2014 profit, saying it expected to end the year with an additional 800,000 to 1 million customers, with a total of more than 23 million people and $56 billion to $57 billion in operating revenues.
It expects earnings of $6.35 to $6.55 per share, up from a previous forecast of at least $6.25 per share.
Aetna said that another area of cost concern, an $84,000 new hepatitis C drug by Gilead Sciences Inc, had not materialized in its first quarter but would still be tracked closely this year.
UnitedHealth said last week that spending on the new treatment, which has spurred a global outcry over the rising cost of novel drugs, had exceeded its expectations several times over. Aetna said it spent $30 million paying for the Sovaldi drug from Gilead in the first quarter, matching its expectations.
In all, the health insurer's quarterly operating profit grew to $1.98 per share as severe winter weather slowed medical services use, which kept claims and costs down. A moderate flu season also helped, it said.
Analysts on average had expected earnings of $1.55 per share, according to Thomson Reuters I/B/E/S. That figure excludes items such as acquisition costs for the purchase of Coventry last year, whose inclusion also helped profit.
Revenue rose to $14 billion from $9.54 billion in the year earlier quarter. Aetna said it had raised health plan premiums to offset new taxes and fees set by Obama's Affordable Care Act. They include a fee used to help fund the exchanges, which began providing coverage on Jan. 1.
Aetna said it had 22.72 million medical customers at the end of March, up from 22.19 million at the end of December and 18.3 million at the end of March 2013.
(Reporting by Caroline Humer; Editing by Michele Gershberg, Sofina Mirza-Reid and David Gregorio)