Cigna’s Clever Move: Ditching Medicare Advantage Before the Storm
Have you ever felt like you had a sixth sense about something, and then it happened? Well, it seems that Cigna, the leading health insurer, had a similar feeling about the Medicare Advantage (MA) business. And let me tell you, this wasn’t your garden-variety hunch.
The Foresight of Cigna
Cigna Group Inc. (NYSE: CI) recently made headlines for its wise decision to sell off its Medicare Advantage business before the looming threat of rising acute care utilization rates began to impact their medical care ratio (MCR) or medical benefits ratio (MBR).
What’s the Big Deal About MCR and MBR?
Think of MCR and MBR as the health insurer’s report card. These ratios represent the percentage of medical premiums paid out for medical reimbursement claims. Ideally, these ratios should be as close to 100% as possible. That means for every dollar taken in, the insurer pays out a dollar in claims. However, if the ratios exceed 100%, the insurer is losing money.
The Rising Tide of Acute Care Utilization
With an aging population and the increasing cost of healthcare, acute care utilization rates have been on the rise. This trend was expected to put significant pressure on insurers’ MCR and MBR, leading to potential financial losses.
Cigna’s Proactive Approach
Cigna saw this trend coming and decided to take action. In 2019, they sold their Medicare Advantage business to WellCare Health Plans for a cool $5.7 billion. This move allowed Cigna to cut its losses before the storm hit.
How Does This Affect You?
As a consumer, this means that Cigna is focusing more on its commercial insurance business, which may result in more competition and potentially lower premiums for consumers. However, it’s essential to remember that the health insurance landscape is complex, and many factors influence premiums.
How Does This Affect the World?
- Increased competition in the commercial insurance market.
- Potential for lower premiums for consumers.
- A continued focus on value-based care to control costs.
- More resources for insurers to invest in digital health solutions and member engagement.
A Final Thought
Cigna’s decision to sell its Medicare Advantage business was a bold move that showcases the importance of staying informed and being proactive in the ever-changing healthcare landscape. It’s a reminder that even the biggest players in the industry need to adapt to stay afloat. So, let’s keep an eye on the trends and make the most of the opportunities they bring!
Disclaimer
This article is for informational purposes only and should not be considered financial advice. Always consult with a financial professional before making investment decisions.
