Cigna is the latest health insurer to report a big boost in second-quarter profits as its health plan members postpone treatment during the spread of the Coronavirus strain Covid-19.
The pandemic has been a windfall of sorts for Cigna, Anthem, UnitedHealth Group and other health insurers that have been reporting their earnings. In Cigna’s case, the health insurer Thursday reported “strong fundamental performance and lower medical costs from deferred care related to the COVID-19 pandemic.”
Cigna Thursday said net income rose to $1.75 billon in the second quarter compared to $1.4 billion in the second quarter of last year. Cigna’s revenues were up 25% to $39.3 billion compared to $38.8 billion in the year-ago period.
Elective procedures are being postponed at hospitals and surgery centers across the country to free up inpatient capacity for patients sickened by Covid-19, which has been a big benefit for all health insurers including Cigna’s rivals Anthem and UnitedHealth Group that have also reported their second quarter results.
There could, however, be trouble ahead for Cigna and the others with large books of business administering benefits for employers. Cigna’s total membership was largely flat at 17 million members compared to 16.99 million members in the year-ago period.
But Cigna chief executive David Cordani told analysts on a call Thursday morning to discuss earnings that many employers have maintained benefits and its client mix hasn’t been seriously impacted so far. Cigna also owns the pharmacy benefit manager Express Scripts, which has a large business of employer clients.
In the second quarter, Cigna’s business administering health benefit services for customers that include large employers was down slightly to 11.8 million members in the second quarter from 11.99 million in the year-ago quarter.
Looking ahead to the second half of the year, Cordani said Cigna’s commercial book of business will be impacted depending on whether employees who have been furloughed return to work or do not and therefore lose their health benefits. And while some Cigna clients could be reducing the size of their workforce there are others who are hiring during the pandemic.
“There’s no doubt that the phenomenon we are talking about is very uneven,” Cordani said of the pandemic’s impact on Cigna’s commercial and employer books of business. “Our approach is a client-by-client approach.”
Source: Forbes