Cigna can sell Medicare Advantage plans again

Dive Brief:

Dive Insight:

The move is good news for the insurer and likely for shareholders.

Cigna's common stock rose to $169.01 per share at the close of business on Friday, up from $167.83 at the day's open. The payer's stock opened at $169.57 on Monday.

The narrow, privatized Medicare Advantage market has been a cash cow for many insurers, and Cigna's lost opportunity costs of at least $500 million point to the program's potential as more Americans age and the market grows.

A recent report from Kaiser Family Foundation found enrollment in the program is about 33% of Medicare beneficiaries (or about 19 million individuals) as of 2017. The largest players in the space are Humana and UnitedHealth who hold a combined 41% of MA enrollment. The report estimated membership could rise to 41% of Medicare beneficiaries over the next 10 years.

Some in the industry have been hearing rumblings of a potential Cigna, Humana merger: 

The MA news has spurred more ruminations about the potential deal. "Not only does the announcement bode well organically for Cigna and its re-entry into the 2018 Medicare Advantage selling season, it paves the way for a potential divestiture of the legacy HealthSpring Medicare Advantage book and a bid for Humana," Ana Gupte, a Leerink Partners analyst, was quoted in Reuters last Friday.

Medicare open enrollment begins Oct. 15.

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Filed Under: Payer
Top image credit: Flickr; Sharat Ganapati