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Obamacare's Exchange Signups, Expanded Medicaid Boost Aetna

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Health insurance giant Aetna (AET), buoyed by growth of newly insured government- subsidized subscribers under the Affordable Care Act and the Medicare program, expects to double operating revenues by the end of the decade, company executives said today in announcing the company's first-quarter earnings.

Aetna chief executive officer Mark Bertolini said the company has more than 230,000 paid health plan members from public exchanges created under the health law and expects that to grow to 450,000 "paid public exchange members" by the end of the year. Aetna executives also say they enrolled 50,000 new health plan members in the first quarter from the expanded Medicaid health insurance program for the poor and expect another 50,000 by the end of the year.

In all, Aetna is projecting an increase of 800,000 to 1 million new health plan members, which will increase the company’s medical membership to more than 23 million.

Aetna and its Coventry subsidiary sell health insurance on public marketplaces known as exchanges in all or parts of 17 states. Health plans are benefitting in part by the rush of Americans who signed up in March, the last month of open enrollment for people who wanted coverage this year. Under the health law, the uninsured can get subsidies to pick a range of health plan options via state or federally-operated exchanges.

In addition, Aetna and Coventry contract with state Medicaid health insurance programs for the poor. Under the health law, more than two dozen states expanded their Medicaid programs to millions of Americans and insurers like Aetna have generated tens of thousands of new customers from that business.

Bertolini is now projecting 2014 revenue to jump to a range of $56 billion to $57 billion from about $54 billion.

“Our strong membership growth in the quarter came from both our commercial and government businesses and we project this momentum will continue,” Bertolini  told Wall Street analysts and investors on the company’s first-quarter earnings call, which lasted an hour.

In Aetna’s first quarter, revenue jumped 47 percent to nearly $14 billion thanks in part to the company’s acquisition last year of Coventry Health Care . Net income soared 36 percent to  $665.5 million, or $1.82 a share, from $490.1 million, or $1.48, a year earlier.

Aetna joins the parade of health insurance companies that have raised their profit forecasts at least once in the last few months. Others benefitting from the health law include Wellpoint (WLP), UnitedHealth Group (UNH) and Humana (HUM).