On the same day that Humana warned it might withdraw from the health exchanges in 2017, a top Cigna executive diverged from the skeptical-on-Obamacare tone of many insurance CEOs.
“We knew these early years on the exchange would be volatile,” Cigna Chief Financial Officer Tom McCarthy told stock analysts at an investor conference in New York Wednesday.
“We expected a plan where we would lose money these past few years, and by golly, we’ve delivered on that plan,” he said with a chuckle.
“We expect to lose money again in 2016,” Smith said. “That, to me, does not undermine the long-term attractiveness of the market. I do expect that over time, that market will evolve to be attractive for the industry generally, and for Cigna in particular.”
Humana said Wednesday that profits fell by 29 percent during the last three months of 2015. The Kentucky-based insurer primarily blamed higher use among Obamacare patients, and set aside money at the end of last year to cover continuing losses this year from those policies.
Aetna, which announced its intention last year to buy Humana, has said that its Obamacare losses ran 3 percent to 4 percent in 2015, and that it will lose money, though at a lower level, on the policies in 2016. Its CEO said: “We continue to have serious concerns about the sustainability of the public exchanges.”
UnitedHealth’s CEO started the trend, saying his company cannot sustain its policy losses, suggesting it might withdraw in 2017.
Anthem has said it is earning money on Obamacare policies.
Cigna is a small player in Obamacare, with only about 204,000 individual customers, including in policies not sold through the exchanges.
Ana Gupte, a health care industry analyst at New York conference host Leerink Partners, asked McCarthy how Cigna views what she called the “extreme populist” views of both New Hampshire primary winners Donald Trump and Bernie Sanders. Sanders has called for a single-payer approach that would be even more generous than traditional Medicare, as it would have no deductibles or co-pays, and would cover vision and dental.
“I’m not sure what single payer means, I mean, not just for managed care companies, I’m not sure what single payer means for anybody,” McCarthy said.
“I think the popular rhetoric around that underestimates the value we bring to helping customers and employees get better productivity,” he said. By educating policyholders, McCarthy said, that influences them to make better health care choices.
