Aetna Inc sharply cut its full-year earnings forecast on Monday because of higher-than-projected medical costs as the health insurer posted a 28 percent drop in second-quarter net income.

The No. 3 U.S. health insurer now expects 2009 operating earnings of $2.75 to $2.90 per share. In June, Aetna lowered its full-year outlook to $3.55 to $3.70 per share from an initial forecast of $3.85 to $3.95.

Second-quarter net income fell to $346.6 million, or 77 cents per share, from $480.5 million, or 97 cents per share, a year earlier.

Excluding items, earnings of 68 cents per share fell 10 cents below the average estimate of analysts, according to Reuters Estimates.

(Reporting by Lewis Krauskopf, editing by Christopher Kaufman)