U.S. health insurers brace for strong fall flu season

July 30, 2009

Wed Jul 29, 2009 3:43pm EDT By Krauskopf

NEW YORK (Reuters) - Several U.S. health insurers are bracing for a strong flu

season as they consider their financial forecasts for the rest of the year, with

one company already reporting higher costs from what it termed as " panic " tied

to the recent outbreak of the H1N1 swine flu.

Monitoring the flu is important for health insurers, which can see their profits

hurt as costs for medical services related to the virus eats into their revenue.

The issue has taken on new scrutiny with the emergence of the new H1N1 swine

flu.

WellPoint Inc, the largest U.S. health insurer by enrollment, said it factored

in $20 million in added costs in the second half of the year related to the flu.

The company gave its full-year profit forecast on Wednesday as part of its

second-quarter earnings report.

" We are projecting more of a flu season than we would historically see based on

the guidance from the medical community around an expected fall flu season, "

WellPoint Chief Executive Officer Braly said in an interview.

WellPoint also saw $20 million in added flu costs in the first half of 2009.

" It wasn't that there was really an elevated flu season, " Chief Financial

Officer Wayne DeVeydt told Reuters. " There was the panic of the swine flu where

people ran to the doctors for any kind of common cold and they were prescribed

Tamiflu as a precautionary measure. "

Aetna Inc, the No. 3 U.S. health insurer, also said it saw a material impact

from the H1N1 flu in the second quarter and expects additional costs in the

second half of the year.

" We are projecting a severe fall flu season, so we have that in our numbers. "

Aetna President Mark Bertolini told analysts on the company's earnings

conference call on Monday.

UnitedHealth Group Inc reported $50 million in H1N1-related services in the

second quarter.

UnitedHealth told analysts in its earnings call last week it was bracing in its

forecast for a " healthy " sized flu season, as it typically does.

" If this is at some unprecedented level...We do not have a pandemic in our

outlook, " UnitedHealth Chief Executive Officer Hemsley said.

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