Health insurer WellPoint Inc posted a better-than-expected first-quarter profit on Wednesday, as the company spent less premium revenue on medical costs and reported improvement in its Medicaid plans for low-income Americans.

The largest U.S. health insurer by membership also slightly reduced its expectations for year-end enrollment.

WellPoint is the latest health insurer to report sharply better-than-expected profit this quarter, following UnitedHealth Group Inc and Humana Inc . But concern over implementation of the new health reform law has so far undercut investor enthusiasm for the companies' results.

It's clearly a solid quarter, Collins Stewart analyst Brian Wright said. We need some of these other issues to be resolved before we get a more sustained rally in the group

WellPoint's net income was $876.8 million, or $1.96 per share, compared with $580.4 million, or $1.16 per share, a year earlier, when results were hurt by net investment losses.

Excluding items, earnings of $1.95 per share were 28 cents ahead of the consensus estimate of analysts, according to Thomson Reuters I/B/E/S.

Operating revenue slipped 3 percent to $14.87 billion.

WellPoint spent 81.8 percent of premium revenue on medical costs, down from 82.5 percent a year ago. While such medical cost ratio improvements have been hailed by investors in the past, they have been less warmly received this quarter because the new law will more tightly regulate such spending.

WellPoint reported 33.8 million members at the end of March, down 2.1 percent from a year ago. It projected year-end membership of about 33.1 million, after saying in March it expected 33.3 million at year's end.

Like its rivals, the Indianapolis-based company is grappling with the effects of the weak economy, including reduced membership as layoffs lead to fewer people with employer-based coverage.

Operating profit in the commercial segment, which includes plans serving employers, rose 8 percent to $978.4 million, as the company cited improvement in its local group business.

Profit rose 49 percent to $326 million in its consumer segment. WellPoint pointed to improvement in its state-sponsored business, which includes its Medicaid plans, due to operational changes, higher reimbursement levels for some programs and a less severe flu season.

WellPoint expects full-year net income of at least $6 per share. Analysts are looking for $6.14.

(Reporting by Lewis Krauskopf; Editing by Derek Caney and Maureen Bavdek)