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Independent Study Shows That Health Insurers Will Pay $1.3 Billion in Rebates

NEW YORK, NY -- (Marketwire) -- 04/27/12 -- Health insurance companies' shares fell Thursday as independent study showed that health insurers will pay $1.3 billion in rebates. Nearly half of that sum is expected to be paid back from four major insurers: United Healthcare Group Inc., WellPoint Inc., Aetna Inc. and Coventry Health Care Inc. according to Goldman Sachs. The Paragon Report examines investing opportunities in the Health Care Plans Industry and provides equity research on WellPoint, Inc. (NYSE: WLP) and Coventry Health Care, Inc. (NYSE: CVH).

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Under the Patient Protection and Affordable Care Act health insurers must spend 80 percent of premiums from individuals and small businesses, and 85 percent of premiums from large employers on health expenses and quality improvements. If an insurer does not spend enough on health costs it must refund the difference back to the consumer. According to a study published by the Kaiser Family Foundation approximately 31 percent of individual policyholders, or around 3.4 million people, are expected to get rebates.

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WellPoint is expected to pay out around $94 million on $33.2 billion in eligible premiums. The company announced that first quarter 2012 net income was $856.5 million, or $2.53 per share, including net investment gains of $62.4 million after-tax, or approximately $0.19 per share. Net income in the first quarter of 2011 was $926.6 million, or $2.44 per share, including net investment gains of $35.6 million after-tax, or approximately $0.09 per share.

Coventry Health Care is a diversified national managed healthcare company based in Bethesda, Maryland. The Company announced that they will release first quarter 2012 financial results on Friday, April 27, 2012. Allen F. Wise, Chief executive officer, will be hosting a conference call at 8:30 a.m. ET on that day.

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