* CFO: Medicare is a "huge growth opportunity"
* Says co. "absolutely" can vie with Humana, UnitedHealth
By Lewis Krauskopf
NEW YORK (Reuters) - WellPoint Inc wants
to expand its Medicare business to take advantage of the
post-war baby boom generation becoming eligible for the U.S.
government-sponsored health program, the health insurer's chief
financial officer said on Wednesday.
WellPoint can "absolutely" compete with the two biggest
Medicare players -- UnitedHealth Group Inc and Humana
Inc -- and will take market share over the next three
to five years, WellPoint CFO Wayne DeVeydt said in an
"It's a space that we will want to play in and we will want
to expand in," DeVeydt said. "You will definitely see us take a
more prominent role prospectively in the Medicare sector."
Some investors have been bearish on Medicare Advantage --
the growing part of the program run by private companies --
because under the new healthcare reform law, Medicare payments
to insurers will be frozen next year and be reduced beginning
But DeVeydt called Medicare a "huge growth opportunity for
us." WellPoint, the largest U.S. health insurer by membership,
operates in 14 core states, and in those states, the company
anticipates about 40 percent of its existing membership will
become eligible for Medicare in the next few years.
"Even with potential margin contraction ... it is a space
where the population is going," DeVeydt said, speaking after
the company posted second-quarter results on Wednesday.
WellPoint has about 350,000 Medicare Advantage members,
which substantially trails UnitedHealth and Humana.
But DeVeydt said WellPoint's business providing
supplemental Medicare plans -- for which it has about 850,000
members, placing it second behind UnitedHealth -- puts it in a
good position, as do its extensive physician networks in its
"We know we that we offer products that seniors want,"
DeVeydt said. "We think we can compete extremely well ... and
with the size of the population aging in, we believe we'll be a
net taker over the next, say, three to five years."
Asked if WellPoint could compete on a national scale with
UnitedHealth and Humana, DeVeydt said: "Absolutely."
DeVeydt said the company would seek Medicare growth both
organically and through deals. Speaking about the merger
climate generally, DeVeydt said while there is a lot of
discussion, too much uncertainty still exists about the fallout
from the new healthcare reform law.
"Many people are willing to sit down and listen but nobody
is really willing to commit yet," he said.
(Reporting by Lewis Krauskopf, editing by Maureen Bavdek)