thisisNOTnassauotb: Aetna and MS

Aetna does not care that BCG works for MS and other things, thus calling into question the quality of their thinking, even if said thinking is driven only by money.

Ristori for healthcare minister of the US or Governor of NY?

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Updated July 29, 2014 11:12 a.m. ET

Aetna Inc. AET -2.61% said its second-quarter profit rose as the insurer posted record medical membership and revenue, but shares declined over concerns about its rising medical costs.

Aetna's total medical benefit ratio—the amount of premiums used to pay patient medical costs—was 83.1% in the second quarter, up from 82.5% a year earlier and above analyst expectations. The company tied the increase in part to costs from new hepatitis C treatments and its public-exchange membership.

Chief Financial Officer Shawn M. Guertin said in an interview that the cost of hepatitis C treatments continued to accelerate in the second quarter but appeared to plateau toward the end of the period. The insurer expects costs for treatments for the liver disease to be up next year and is factoring that into its pricing for 2015 plans.

Meanwhile, Aetna said it had nearly 600,000 health-law marketplace members at the end of the second quarter, though it expects the number to drop to a little more than 500,000 by the end of the year due to attrition. The insurer, which is selling plans in 16 states and the District of Columbia, said it will likely add one more next year, Georgia.

Aetna said the overall individual business will amount to a "modest headwind" to earnings this year. Mr. Guertin said Aetna expects the new enrollees under the Affordable Care Act to "have higher costs and higher utilization" than other commercial-plan members. But so far it appears to be "in the neighborhood of our pricing assumptions," he said.

Aetna said it isn't seeing a lot of small businesses dumping employees into the public marketplaces so far. Mr. Guertin said Aetna believes that dumping will "break along industry lines" over time, with more occurring in businesses with lower-wage workers who could benefit from federal subsidies. However, the "pace and the degree of dumping is still an open question," he said.

Overall, Aetna said it continues to "experience moderate medical cost trends" and projected the medical costs from its commercial plans would come in at the low end of its projected range for 6% to 7% growth.

"The lowering of the cost trend outlook to the bottom-half of the 6%-7% prior range should somewhat help ameliorate concerns regarding the commercial medical care ratio," Sterne Agee analyst Brian Wright said.

Aetna shares, up 34% over the past year, declined as much as 3.3% in early trading.

The company also raised its earnings outlook for the year by 10 cents on the lower end of its previous range and by five cents on the higher end to $6.45 to $6.60 a share.

In addition, Aetna increased its expectations for accretion from its acquisition of Coventry Health Care Inc., now seeing 55 cents to 60 cents a share in additional benefits, up five to 10 cents from its previous range.

Overall, Aetna posted quarterly earnings of $548.8 million, or $1.52 a share, up from $536 million, or $1.49 a share, a year earlier. Excluding items such as costs related to the Coventry deal, per-share operating earnings rose to $1.69 from $1.62.

Operating revenue, which excludes net realized capital gains and losses, increased 25% to $14.49 billion, mostly from higher premiums from about one additional month of revenue from the Coventry deal.

Analysts had projected earnings of $1.60 a share and revenue of $13.99 billion, according to Thomson Reuters.

The company had total medical membership of 23.1 million as of March 31, up from 22.72 million in the prior quarter and 22 million a year earlier.

Write to Michael Calia at michael.calia@wsj.com

Results: 6

Select item 243060021.

Effects of Bacille Calmette-Guerin after the first demyelinating event in the CNS.

Ristori G, Romano S, Cannoni S, Visconti A, Tinelli E, Mendozzi L, Cecconi P, Lanzillo R, Quarantelli M, Buttinelli C, Gasperini C, Frontoni M, Coarelli G, Caputo D, Bresciamorra V, Vanacore N, Pozzilli C, Salvetti M.

Neurology. 2014 Jan 7;82(1):41-8. doi: 10.1212/01.wnl.0000438216.93319.ab. Epub 2013 Dec 4.