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Health Insurance Competition Heats Up: Earnings

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What You Need to Know

  • David Cordani of Cigna is seeing significant pockets of competitiveness in certain markets.
  • Bruce Broussard says Humana took a more conservative approach to 2022 bids.
  • One major shadow is the uncertainty surrounding the COVID-19 pandemic.

Some carriers might be fighting harder this year for some types of health insurance business.

That’s one message that came out of the recent round of quarterly insurance company earnings releases and quarterly insurance company conference calls with securities analysts.

Individual Health

David Cordani, Cigna’s CEO, told analysts that parts of both the employer health market and the individual and family plan (IFP) market are hot right now.

“Indisputably, there are some pockets of intense competitive pricing in the IFP marketplace,” Cordani said. In the individual market, he said, one priority is “maintaining price discipline in temporarily dislocated markets.”

Cigna believes it can add more employer health business in 2022 while improving its ratio of claim costs to premium revenue, Cordani said.

In the individual market, he said, Cigna will probably lose some enrollees but end up with better medical cost ratios (MCRs).

“We will be quite disciplined,” Cordani said. “We’re willing to make targeted trade-offs for MCR or margin versus volume.”

In the long run, however, Cigna continues to see the individual health market as a growth market.

Medicare Plans

Humana is one of the biggest players in the Medicare Advantage plan market.

Bruce Broussard, Humana’s CEO, said Humana has been seeing “more and more intensity in the local markets.”

“Similar to in the past, we see some players being more aggressive to try to gain market share, while others a little more aligned with pricing that promotes a little more stability,” he said. “So, we do see a bell curve in how people are approaching it.”

Meanwhile, all of the marketing efforts are creating more consumer awareness of Medicare plans, he said.

“I feel that we have been a beneficiary of that,” Broussard added.

The Earnings:

CVS Health

The Woonsocket, Rhode Island-based pharmacy chain and health insurer is reporting $1.6 billion net income for the third quarter on $74 billion in revenue, compared with $1.2 billion in net income on $67 billion in revenue for the year-earlier quarter.

The health care benefits business, which includes Aetna, is reporting $1.1 billion in adjusted operating income on $20 billion in revenue, compared with $1.1 billion in adjusted operating income on $19 billion in revenue.

Shawn Guertin, the chief financial officer, reported that commercial COVID-19 inpatient admissions were three times higher in August and September than in January, the previous peak month in the pandemic, and that COVID-19 testing costs approached January levels.

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Testing costs represented about 35% of the company’s total COVID-19-related costs in the quarter.

The company ended the quarter providing or administering major medical coverage for 24 million people, up from 23 million people a year earlier.

Cigna

The Bloomfield, Connecticut-based health insurer is reporting $1.6 billion in net income for the third quarter on $44 billion in revenue, up from $1.4 billion in net income on $41 billion in revenue for the year-earlier quarter.

The company ended the quarter providing or administering major medical coverage for 15 million people, or about as many people as it was covering a year earlier.

Humana

The Louisville, Kentucky-based health insurer is reporting $1.5 billion in net income for the third quarter on $21 billion in revenue, up from $1.3 billion in net income on $20 billion in revenue for the year-earlier quarter.

The company ended the quarter providing or administering major medical coverage for 9.8 million people, up from 9.5 million people a year earlier.

Oscar Health

The New York-based health insurance startup is reporting a $213 million net loss on $444 million in revenue, compared with a $79 million net loss on $102 million in revenue for the year-earlier quarter.

The company lost money partly because claims incurred increased to $453 million, from $85 million, and the medical loss ratio, or ratio of claims to premiums, increased to 99.7%, from 90.5%.

Mario Schlosser, Oscar’s CEO, said that COVID-19 claims were higher than the company had expected during the quarter, and that offsets from reduced use of other types of care were lower. COVID-19 increased Oscar’s third-quarter medical loss ratio by about 9 percentage points. Reductions in use of other types care cut the net impact to 6 percentage points.

GoHealth

The Chicago-based health insurance sales startup is reporting a $55 million net loss for the third quarter on $212 million in revenue, compared with a $206 million net loss on $163 million in revenue for the year-earlier quarter.

The company estimates the lifetime value per approved submission of a commissionable policy fell to $926 in the latest quarter, from $987 in the year-earlier quarter, for Medicare Advantage plans, and to $874, from $934, for Medicare supplement insurance policies.

EHealth

The Santa Clara, California-based health insurance retailer is reporting a $60 million net loss for the third quarter on $53 million in revenue, compared with a $15 million net loss on $94 million in revenue for the year-earlier quarter.

The company attributed the loss mainly to the effects of efforts to shift to use of mainly internal call center agents and to apply new sales quality checks.

The company provides estimates of the lifetime value of commissions per approved member.

The estimated lifetime value increased to $975, from $898, for a Medicare Advantage enrollee but fell to $955, from $1,071, for a Medicare supplement insurance policy.

Pictured: David Cordani (Photo: Victor J. Blue/Bloomberg)