Cigna is poised to slightly lessen its presence on the Affordable Care Act marketplaces, and the insurer will remain “cautious and slow” in its approach to these markets moving forward, according to CEO David Cordani.
In 2017, Cigna will exit three exchanges while entering three more, but the result will be “a smaller geographic footprint than we were anticipating,” Cordani told analysts and investors on Thursday’s third-quarter earnings call.
During the call, Cordani reiterated his position that the Bloomfield, Connecticut-based company has expected the exchanges to be unprofitable, and that the number of enrollees wouldn’t match up with original projections.
Cordani was optimistic that Cigna will experience revenue growth in the individual market next year, but not enough to cover claims expenses. “We’re continuing to plan for a loss,” Cordani said.
Overall, Cigna posted solid third-quarter financials, as revenue grew 5.5 percent and its earnings came out to be $416 million. Cordani summarized the company’s standing with a dose of sobriety, however: “Suffice to say 2016 is a choppy year for us, 2017 will be quite attractive," he said.
Cigna was the second major insurer this week to tell investors that it is re-evaluating its exchange presence, as Anthem CEO Joseph Swedish indicated that the insurer is assessing "the long-term viability of our exchange footprint." Exits by Humana, Aetna and UnitedHealth have stoked worries that the exchanges lack long-term viability.
That could sever the backbone of the exchanges--Blues plans--Bloomberg View columnist Megan McArdle argues. Anthem runs 14 Blue Cross Blue Shield plans, and these plans have long been considered the canary in the coal mine for the exchanges, she writes. If Anthem follows through and reduces its participation, “it’s likely that we’ll see more counties, and possibly entire states, with no Obamacare policies on offer,” according to the article.