The players in the private health insurance industry (IYH) aim for a favorable enrollment mix to reduce taxes and other liabilities while at the same time generating sustainable profits. Accordingly, managed care organizations such as Humana (HUM), Aetna (AET), Anthem, Cigna (CI), and WellCare Health Plans (WCG) are increasingly focusing on government-sponsored and international enrollments to balance risk and earn sustainable profits.
The above graph shows that Cigna’s membership is mainly concentrated in the middle market segment. Membership is lower in the national, international, select, government, and individual segments.
The middle market segment mainly consists of employers with 250 to 4,999 full-time employees, spread across multiple states in the US. It also includes employers with more than 5,000 employees at a single site.
The middle market segment includes Taft-Hartley plans—union collectively bargained pension plans involving a group of employers. These plans allow small and medium-sized employers to afford pension benefits for their employees, as multiple employers share the medical risk.
Cigna provides both fully insured and self-insured plans to the middle market segment. To learn more about fully insured and self-insured plans, read Shift to self-insurance plans affects health insurance stocks.
In the national market segment, Cigna offers self-insured plans to multi-state employers with 5,000 or more employees. A bigger enrollee group affords better risk distribution and low claim liabilities. Also, multi-state employers can ensure consistent benefits are offered across areas by providing self-insured plans to their employees.
Cigna offers fully insured and self-insured plans to local and multinational companies in Asia, the Middle East, Canada, and Europe.
About 8% of Cigna’s customers belong to the select segment, which includes employers with 51 to 249 employees. In the case of small employers, the ACA (Affordable Care Act) has restricted health insurers from charging premium rates based on past claims experience. The change in premium rates is expected to increase enrollments in this segment.
Government and individual
Government-sponsored and individually insured members form a small portion of Cigna’s total enrollments. Cigna, however, aims to grow its government-sponsored business through organic and inorganic opportunities. To improve individually insured membership, the company has introduced several customer engagement initiatives.