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Trend lines look good for WellPoint

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More people have jobs and yet the use of health care remains stagnant—which should drive nice profits when WellPoint Inc. reports first-quarter earnings on Wednesday. The trends even have some wondering if consumer-driven health plans are finally starting to make a real difference in Americans’ health care spending habits.

The U.S. economy added nearly 2 million jobs over the past 12 months, according to the Bureau of Labor Statistics. That growth in employment helped drive 1.6 million new members into the health plans operated by Minnesota-based UnitedHealth Group over the past year, the industry bellwether reported on Thursday.

Yet levels of spending by its health plan members “remain moderate,” reported UnitedHealth CEO Stephen Helmsley. The percentage of health insurance premiums spent on medical bills ticked down to just 81 percent in the first quarter, the company reported. That helped boost UnitedHealth's profits by 3.1 percent, exceeding analysts' estimates.

Analysts expect WellPoint's profits to dip 3 percent in its first-quarter report, to $2.27 per share, according to a survey by Thomson Reuters. But the UnitedHealth report suggests the expected return of health care consumption is not happening—at least not yet.

"There has been some noise around volume returning, but this report does not point toward a return of utilization," BMO Capital Markets analyst Dave Shove wrote in a note to investors.

Instead, UnitedHealth’s results reinforce the trends seen in 2011. According to market research firm IMS Health, Americans reduced their visits to physicians by nearly 5 percent in 2011 and spent 1 percent less on prescription drugs. Adjusting for inflation, per-capita spending on health care grew just 0.5 percent last year—a far cry from the galloping pace of health care spending over the past 40 years.

That data prompted Drew Altman, CEO of the Kaiser Family Foundation, to speculate that we may be witnessing a new normal in U.S. health care spending.

“We have a new phenomenon to watch with important implications for people and costs,” Altman wrote in an April 16 blog post. He added, “It will take a few more years of monitoring utilization patterns to know if we are seeing a recession-effect or a real change in patterns of use, what may be driving them, and how deep this one-time adjustment in patterns of use may go.”

If the lowered health care spending is more than an after-effect of the recession, Altman thinks the main reason is the increase in high-deductible health plans. He cites Kaiser’s data showing that the share of workers in a plan with a deductible of $1,000 or more grew from 18 percent in 2008 to 31 percent in 2011.

In Indiana, high-deductible and consumer-directed health plans have been embraced even more aggressively than across the country.

Altman notes that the Patient Protection and Affordable Care Act actually will accelerate this growth. The law will pay subsidies to help individuals and small businesses to buy health insurance in exchanges where coverage will be standardized into four categories. But the cheapest of those plans will have family deductibles approaching $8,000, according to Kaiser’s estimates.

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  1. A couple of issues need some clarification especially since my name was on the list. I am not sure how this information was obtained and from where. For me, the amount was incorrect to begin with and the money does not come to me personally. I am guessing that the names listed are the Principal Investigators (individual responsible for the conduct of the trail) for the different pharmaceutical trials and not the entity which receives the checks. In my case, I participate in Phase II and Phase III trials which are required for new drug development. Your article should differentiate the amount of money received for consulting, for speaking fees, and for conduct of a clinical trial for new drug development. The lumping of all of these categories may give the reader a false impression of physicians just trying to get rich. The Sunshine Law may help to differentiate these categories in the future. The public should be aware that the Clinical Trial Industry could be a real economic driver for Indiana since these revenues supports jobs and new job creation. Nationally, this account for 10-20 billion which our State is missing out on to a large degree. Yes, new drug and technology development has gotten most of the attention (e.g. CTSI, BioCrossroads, etc.) However, serious money is being left on the table by not participating in the clinical trials to get those new drugs and medical devices on the market!!!! I guess that this is not sexy enough for academia.

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