Over the next five years, WellPoint Inc. expects the employer-sponsored insurance business to shrink slightly, forcing it to shift its focus to government-sponsored plans.

The Indianapolis-based health insurer discussed its multi-year strategy in light of changes from the 2010 health reform law during its annual investor day on Feb. 23.

By 2015, it expects the number of insured Americans will rise 31 million above last year’s level, to a total of 286 million. But WellPoint expects only 1 million of those gains to occur at large or self-funded employers.

And small employers actually will insure 6 million fewer people, WellPoint predicts, as some companies stop offering coverage and instead send their workers to buy coverage individually in state-based exchanges that the law requires to be created.

Beginning in 2014, the health reform law will provide subsidies to help individuals buy coverage, which will lead 11 million more people to buy insurance that way, according to WellPoint’s estimates.

But the biggest growth will come from growth in the Medicare and Medicaid programs, which WellPoint expects to add 19 million and 6 million people, respectively.

“We think Medicare, demographically, is an opportunity for us. We haven’t captured the market share that we could there,” WellPoint CEO Angela Braly told investors. “We really positioned our Medicaid managed care business, what we call our state-sponsored business, for the growth that we know is coming in terms of the reform around Medicaid.”

WellPoint’s estimates were made using an analysis by the Booz & Co. consulting firm, as well as data from the Kaiser Family Foundation, the U.S. Census Bureau, the Congressional Budget Office and WellPoint’s internal analysis.

WellPoint currently provides insurance coverage to more than 33 million Americans, more than any other company. But its presence in Medicare, Medicaid and individual lines is quite small.

WellPoint covers just 1.3 million seniors under Medicare Advantage and Medicare supplemental products, just 1.8 million low-income recipients of Medicaid coverage and just 1.9 million individual customers. (WellPoint also provides drug coverage to 1.2 million seniors through the Medicare Part D program.)

So the company is already getting approval to expand the number of counties it is eligible to serve under Medicare Advantage, and Braly even said WellPoint might make an acquisition to ramp up its Medicare Advantage business quickly.

Also, the company is preparing to bid for Medicaid business outside the 14 states where it operates its Blue Cross and Blue Shield insurance plans, according to company presentations to investors. WellPoint also is considering partnerships with Blue Cross insurers in states where it has no existing operations.

For state Medicaid programs, which are funded significantly by the federal government, WellPoint acts as a contractor to administer benefits. For example, in Indiana, WellPoint is one of three companies that administer benefits under the Hoosier Healthwise program run by Indiana Medicaid.

“We think we’re foundationally really set to grow that business,” Braly said of Medicaid contracts. Of course, all other major insurers are also licking their chops over the roughly $40 billion in annual federal spending authorized by the health reform law to expand eligibility and enrollment in Medicaid plans.

In addition to government programs, WellPoint has been and will continue to try to grow its dental and vision plans, both of which are now modest in size.

Braly acknowledged that profit margins will shrink for several of WellPoint’s business segments—mainly as a result of the health reform law’s requirement that insurers spend at least 80 percent of the premiums they receive from employers and individual customers on medical care (85 percent for large employer accounts).

Still, she promised that WellPoint would generate at least 10-percent annual growth in its earnings per share. But much of that performance will come from reducing expenses (with a projected $400 million in cuts this year) and by buying back shares. WellPoint has reduced its number of shares outstanding by 45 percent since 2005.

“We are acknowledging, even in our growth model, the potential for margins to tighten, but the opportunity for volume to grow,” Braly said.