After earlier saying it might expand to as many as 10 public health exchange markets in 2017, Cigna Inc. is now pulling back.
Yesterday on Cignas third quarter earnings call, CEO David Michael Cordani told Wall Street analysts the health insurance company is re-evaluating its public healthcare marketplace expansion. As of now Cigna will only participate in seven public exchange markets in 2017, up from five this year.
We entered five markets, and we deliberately and slowly grew to seven markets, Cordani told analysts based on a transcript from SeekingAlpha.com. As we look to 2017, our initial plan had us growing into 10 markets but after assessing all the market dynamics, we’re going to end up in seven markets in 2017 and with a different mix where we will shrink our footprint in three markets by leaving three markets on the exchange.
Cigna announced in July it had filed to sell on the public exchange market in Chicago, in Raleigh/Durham, and other parts of North Carolina. Cigna also was targeting northern Virginia and Richmond. Cigna has yet to say in which seven markets going forward it will write public exchange policies and which states and regions within those states it will drop.
On the third quarter earnings call Cigna offered a glimpse into its public exchange business, but didnt break out much detail. But Cigna is revising its currently unprofitable public exchange business, the company says. We’ll have a new offering in three different markets, specifically built on our collaborative model, Cordani told Wall Street analysts.
Cigna is anticipating some revenue growth in its public exchange business but didnt discuss specifics. We’re going to actually be in seven markets with a different mix, net-net taking it all as a whole, Cordani said. For next year, we’re going to expect to see some revenue growth there. We’re continuing to plan for a loss in the business, which is what we think is appropriate as we continue to refine our learnings and look to determine whether there’s a sustainable future here.
For the nine months ended Sept. 30, total revenue grew 3.7% to $23.00 billion. Net income was $1.48 billion compared with $1.66 billion for the first nine months of 2015. Cigna is the second major health insurance company this week to tell Wall Street analysts is mulling further cutbacks to the public health insurance exchange business.
Yesterday Anthem Inc., which provides health insurance for 73 million people, told Wall Street analysts the company is eyeing even less participation on Healthcare.gov and other public exchange markets.