Aetna and Molina Health's latest results are a stark reminder that government health programs continue to be a source of profitable growth for health insurers, if managed well, as long as you're not talking about the Obamacare exchange market.
"Operating results in our government business remain robust, with government premiums representing more than half of total Health Care premiums," said Mark Bertolini, Aetna chairman and CEO, on the company's earnings conference call.
Aetna reported second-quarter earnings of $3.60 per share, well above analyst estimates, on $15.5 billion in revenues. Profits rose nearly than 50 percent from a year ago, helped by increased Medicare membership, and lower exposure to money-losing Obamacare plan costs, after exiting all but four state exchanges for 2017.
The company raised its 2017 full-year outlook to between $9.45 to $9.55 per share, from $8.80 to $9.00 per share, but also cautioned that it will be investing more over the next year in order to expand its Medicare business, after its two-year effort to acquire rival Humana was blocked.
"Our strong performance through the first half of 2017 has provided us the flexibility to continue to make these investments and still deliver strong financial results," said Bertolini.