Health insurers adjust to once-scary reform rule
A new healthcare overhaul mandate that once stirred fear among insurers is proving to be challenging -- but not too challenging -- as it makes its debut in 2011. Major health insurers say a provision that requires them to spend a certain percentage of the premiums they collect on care-related costs will eat into earnings this year. But Aetna Inc. and Cigna Corp. both say their profits could still grow in 2011, and Aetna also plans to start paying a significantly higher dividend to shareholders this year. WellPoint Inc., the largest health insurer based on enrollment, expects to take a $300 million hit this year just from the so-called medical-loss ratio provision, and it forecast a lower profit than 2010. But Citi analyst Carl McDonald predicts the insurer will soon announce its own shareholder dividend.
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