Cigna profits up, fueled by strong enrollment
- Cigna’s net income from operations was $716 million in the third quarter of 2017, up 42% from $503 million in the same period last year. Profits were fueled by strong customer enrollment and lower commercial business costs.
- Revenue for the quarter rose 5% to $10.4 billion from $9.9 billion the previous year, according an earnings report.
- The health insurer’s third-quarter “total commercial medical care ratio” — the share of premiums spent on claims — clocked in at 78.6%, compared with 79.4% a year ago. Cigna officials attributed the change to “strong performance and effective medical cost management” in both its employer and individual businesses.
Cigna is just the latest payer to post a strong Q3. Anthem beat expectations with increases in net income and operating revenue, Centene reported a nearly 10% revenue increase and Aetna said net income increased 39%. Insurers are figuring out what works best for them financially when it comes to the Affordable Care Act (ACA) exchanges. Some payers are seeing success and have expanded their footprint while others are posting better numbers after pulling back their exchange participation.
Cigna’s total government medical care ratio of 84% reflected strong performance in its Medicare Advantage and Medicare Part D businesses, the company said.
Cigna is one of just a few large payers offering individual coverage in ACA marketplaces in 2018. The company is participating in six state exchanges: Colorado, Illinois, Missouri, North Carolina, Tennessee and Virginia.
Humana, Aetna and UnitedHealth Group all rolled back participation in the marketplace for the upcoming enrollment year, citing continued losses. Cigna announced earlier this year that it will stop selling plans in Maryland.
In a third-quarter earnings call, Cigna President and CEO David Cordani didn't mention the health insurance exchanges per se, but did acknowledge the “highly disruptive regulatory and legislative climate.” He also noted ongoing challenges brought on by an aging population, chronic health conditions and rapid advances in technology.
During a question-and-answer session, Cordani said the company will be watching to see what impact President Trump’s executive order loosening what health plans are required to cover has after it is “internalized by all the respective agencies and the specific regs … throughout 2018.” He pointed to Cigna’s diverse portfolio as a strength amid the current regulatory uncertainty.