Cigna’s 2025 health plan prices based on ‘higher than normal’ cost increases
The company sees strong interest in tailored provider networks that cater to employee needs, as well as obesity drug cost control efforts.
Cigna is basing employer health plan prices for 2025 on the assumption that health care cost increases will continue to be higher than normal, according to Brian Evanko, the chief executive officer of the company’s Cigna Healthcare health coverage unit.
Overall, the market is “competitive but rational,” Evanko told securities analysts today during a conference call. “We’re very pleased with the strength of our U.S. employer business within Cigna Healthcare.”
But Evanko said factors like the popularity of expensive new GLP-1 agonist anti-obesity drugs are driving up costs.
“We’ve remained disciplined with our own pricing strategy,” Evanko said. “We’re pricing for 2025 rate increases that are greater than what we achieved in 2024, given those continued elevated cost trend expectations, the competitive environment and our desire to preserve margin levels.”
Related: Down to the wire: 2024 elections impacting health care and employee benefits
Many employers are interested in using tailored provider networks to hold down costs, and others are considering adopting programs that could help them hold down the cost of care for mental health problems, substance use problems and obesity, Evanko said.
One topic coming up is how to keep people with obesity on GLP-1 agonists long enough to achieve the desired weight control outcome, David Cordani, Cigna’s CEO, said.
Cigna executives talked about the employer health plan market during a conference call Cigna held to go over earnings for the third quarter with securities analysts.
The backdrop: Other major medical coverage providers that have released third-quarter earnings have not said much about their employer plan operations.
Unum, a company that sells disability insurance, critical illness insurance and other health benefits other than major medical insurance, said it sees underlying growth in its market stabilizing at about 2% to 3%.
Executives at Lincoln Financial, another company in the non-medical health benefits market, said they hope to use improved customer experience and relationship management to expand sales of coverage with higher profit margins.
Cigna’s earnings: Cigna is reporting $825 million in net income for the quarter on $64 billion in revenue, compared with $1.4 billion in net income on $49 billion in revenue for the third quarter of 2023.
Operating income at the health care business held steady at about $1.2 billion on $13 billion in revenue.
Enrollment in U.S. fully insured employer plans fell 1%, to 2.2 million, and enrollment in self-insured employer plans that Cigna administers fell 2%, to 13.6 million.
Enrollment in international health plans that Cigna administers increased 1%, to 433,000.
The number of people with Cigna individual and family policies purchased through the Affordable Care Act public exchange system fell 39%, to 550,000,
Cigna now has fewer, more profitable exchange plan enrollees than it had last year, Evanko said.