Cigna Makes $3.7B Deal That Includes Sale of Medicare Plan Unit
Illinois Blue's parent has also agreed to buy the company's CareAllies hospital care management business.
Cigna is selling its Medicare plan business and some other operations to Health Care Service Corp. for $3.7 billion.
HCSC is the nonprofit parent of Blue Cross and Blue Shield of Illinois and many other states’ Blue Cross and Shield plans.
A competitor, Humana, last week reported concerns about the ferocity of price competition in the Medicare Advantage plan market.
David Cordani, Cigna’s chairman, said that Cigna believes that the Medicare market is still attractive, but that running the Medicare business “required sustained investment, focus, and dedicated resources disproportionate to their size within the Cigna Group’s portfolio.”
Cigna prefers to focus on its major medical insurance business and its Evernorth health care services delivery business, Cordani said.
What it means: More of your clients may know what HCSC is. Completing the deal could give it a total of about 800,000 Medicare Advantage plan enrollees, lifting it to eighth place in terms of the number of Medicare Advantage enrollees, up from 17th today.
The companies: Cigna was formed in 1982 from the merger of Connecticut General Life and INA Corp. INA was founded in 1792.
Since then, Cigna has shed its property-casualty insurance business, most of its life insurance operations and its disability insurance business. It acquired Express Scripts, a large pharmacy benefits manager, in 2018.
HCSC is a Chicago-based insurer with $54 billion in annual revenue. It provides or administers health coverage for 18 million people.
The deal: HCSC has agreed to buy Cigna’s Medicare supplement insurance business, its Medicare Part D prescription drug business and its CareAllies hospital care business as well as its Medicare Advantage plan business.
HCSC has agreed to use Cigna’s Evernorth business as the pharmacy benefit services provider for the Medicare plans for at least four years.
Cigna and HCSC hope to complete the deal by March 31, 2025.
Pictured: Cigna’s headquarters in Bloomfield, Connecticut. Photo: Joe Buglewicz/Bloomberg