(Reuters) — Health insurer Anthem Inc. reported a better-than-expected quarterly profit, helped by an increase in premium revenue and memberships for its government plans, particularly in the Medicaid program.

The second-largest U.S. health insurer also forecast 2015 earnings above analysts' average estimate but said medical costs will rise in the year.

Anthem, which operates Blue Cross Blue Shield health plans in 14 states, said its fourth-quarter medical benefit ratio of 84.5% represented a decline of 330 basis points from a year ago. The measure represents the percentage of premiums paid out in medical claims and is closely watched by investors.

Anthem also increased its quarterly dividend by 43% to 62.5 cents per share.

"Overall, Anthem produced a solid quarter as expected, but we expect the market to be pleased with the guidance and dividend raise," Oppenheimer analyst Michael Wiederhorn said in a research note.

The company forecast 2015 adjusted earnings to be more than $9.70 per share and operating revenue of between $78 billion-$78.5 billion. The adjusted earnings per share figure does not include more than 40 cents of amortization of assets.

Analysts on average were expecting earnings of $9.45 per share and revenue of $79.5 billion, according to Thomson Reuters I/B/E/S.

The vast majority of Anthem's business is in employer-based insurance, but the company is also one of the biggest players on the individual exchanges created under the national health care reform law. It also operates Medicare and Medicaid plans.

It had 37.5 million medical members at the end of December and medical membership is expected to be in the range of 38 million to 38.2 million in 2015, the company said.

The company's net profit rose to $506.7 million, or $1.80 per share, in the fourth quarter ended Dec. 31 from $148.2 million, or 49 cents per share, a year earlier.

The year-earlier quarter included loss from discontinued operations of $160.7 million.

Excluding items, the company earned $1.73 per share.

Total revenue rose 6% to about $19 billion.

Analysts on average had expected a profit of $1.72 per share and revenue of $19 billion, according to Thomson Reuters I/B/E/S.