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Anthem's individual ACA plans hammer 4th-quarter profit

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Health insurer Anthem Inc. reported much lower profit in the final quarter of 2015, mostly because it had to pay out a lot more in claims for its individual market members.

Anthem, like other insurers, grappled with a tougher-than-expected second year in the Affordable Care Act's exchanges. People who signed up for coverage turned out to be sicker than originally thought. But the Indianapolis-based giant still posted hefty profits on the year, indicating that government-sponsored business continues to buoy insurer profit.

Fourth-quarter earnings dropped 64% to $180.9 million, Anthem said Wednesday. Total revenue in the three-month period rose 6.3% to almost $20.2 billion, giving Anthem a slim fourth-quarter margin of 0.9%. The boost to revenue mostly stemmed from Anthem's growing Medicaid business and self-insured employers.

Anthem's net profit for all of 2015 stayed nearly flat at $2.56 billion, and revenue increased 7.4% to $78.4 billion. The insurer expects revenue this year to come in at $81 billion at the high end, while adjusted earnings per share will be $10.80. Those projections do not include Anthem's pending $54.2 billion acquisition of Cigna Corp., which the company expects will close in the latter half of this year.

The company lost 118,000 individual members in the fourth quarter, but the figure was not broken down between on- and off-exchange members. Anthem lost thousands of exchange members in the third quarter as well. CEO Joseph Swedish said at the time many consumers were moving to competitors' plans due to "unsustainable pricing."

Anthem finished the year with 38.6 million members, and all of the net gains came from its Medicaid segment.

Anthem did not immediately provide any update regarding its large data breach from last year, when nearly 80 million former and current members had their medical data hacked.

Bob Herman writes for Modern Healthcare, a sister publication of Business Insurance.