A soft economy and a new regulatory environment may have affected the third-quarter earnings of two health insurers that reported results today – CIGNA Corp. and Coventry Health Care Inc.
CIGNA, Bloomfield, Conn. (NYSE:CI), says it really did earn more from continuing operations.
CIGNA is reporting $200 million in shareholders’ net income for the third quarter on $5.6 billion in revenue, compared with $307 million in shareholders’ net income on $5.3 billion in revenue for the third quarter of 2010.
Earnings at the health care unit increased to $248 million on $4.7 billion in premium and revenue, up from $240 million on $4.6 billion in fee revenue.
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The loss was mainly the result of a $180 million loss in CIGNA’s run-off reinsurance operation, which is related to a discontinued variable annuity business.
The number of domestic health care plan enrollees held steady at about 11 million, and the number of international health plan enrollees increased to 1.2 million, from 1 million.
The “guaranteed cost care ratio” fell to 80.9%, from 80.4%.
During the company’s third-quarter earnings call, CIGNA executives seemed to be happier to talk about commercial health plan operations than executives at some major competitors have been in recent days.
The executives noted, for example, that the company already has 115,000 enrollees in the new accountable care organization plans, which are supposed to use new reimbursement strategies to encourage doctors and hospitals to work more closely together to manage the cost and quality of care for the whole patient.
But CIGNA is facing the same federal minimum medical loss ratio (MLR) rules that other carriers are facing.
The rules, imposed by the Patient Protection and Affordable Care Act of 2010 (PPACA), require carriers to spend 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts.
CIGNA budgeted about $19 million, after taxes, on health plan rebates for the third quarter, executives said.