US medical health insurance firm Cigna Group is contemplating promoting its Medicare Benefit enterprise, reported Reuters, citing undisclosed sources.
A divestment of the enterprise may doubtlessly herald a number of billions of {dollars} for Cigna, the sources mentioned.
Cigna has employed an funding financial institution to evaluate choices for its Medicare Benefit enterprise, which oversees authorities medical health insurance for people 65 years and over.
The sources mentioned that Cigna may nonetheless select to retain the enterprise as talks are at an early stage with potential traders together with different companies and personal fairness teams.
Cigna entered the Medicare Benefit market in 2011 by way of the acquisition of HealthSpring in a deal valued at $3.8bn.
The well being insurer’s potential retreat comes at a time when the US Authorities is turning into extra frugal with how a lot it pays well being insurers for his or her companies.
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Commenting on the report, a Cigna consultant mentioned it’s in opposition to firm coverage to remark “on rumours or hypothesis”.
In 2022, Cigna’s Medicare Benefit division made up 4.4% of the corporate’s complete revenue of $179.4bn.
To be eligible for Medicare Benefit, prospects should already be enrolled in Medicare, a federal programme primarily for Individuals aged 65 years and older, in addition to these with sure disabilities.
Final week, throughout its quarterly earnings name, Cigna mentioned it has elevated the geographic footprint from 20% of people eligible for Medicare Benefit protection in 2019 to greater than 40%.
Moreover, Cigna acknowledged that Medicare Benefit’s revenue margins in 2023 are nonetheless under its long-term purpose of 4–5%, and this example is anticipated to persist by way of 2024.
The corporate mentioned adjustments within the US Authorities’s cost scheme and rising administrative bills affected the unit.
