Cigna raises profit view on Obamacare boost

Health insurance companies are making more money than they thought they would, thanks to the Affordable Care Act.

By MSN Money Partner May 1, 2014 1:42PM
Credit: Courtesy of HealthCare.Gov

Caption: Screenshot of the HealthCare.gov website
 By Bruce Japsen, Forbes

Cigna (CI) became the latest in a parade of health insurance companies to report they are going to make even more money than they thought they would in 2014, thanks to new business strategies and a surge of younger customers signing up for coverage under the Affordable Care Act.

Cigna executives Thursday morning now expect income from operations in the range of $1.93 billion and $2 billion or between $7.05 and $7.35 a share for 2014. That's an increase of 20 cents per share from previous guidance, the company said during its first quarter earnings report.


Cigna chief executive officer David Cordani said the company is performing well across all of its markets and is also moving to new strategies that encourage accountable care, paying "health coaches" and nurse care managers to help traditional medical care providers treat patients more effectively, keeping them well and in less-expensive care settings than hospitals. 


Employers and the health law encourage such "population health" approaches to providing medical care, moving away from traditional fee-for-service medicine to so-called "value-based care."


And though Cigna executives maintain the insurer will lose money this year on individuals who signed up for coverage via public exchanges under the health law, executives said a surge of younger people signing up in the waning weeks of open enrollment in March and into April is good financial news.


Cordani said during a 70-minute conference call with Wall Street analysts sand investors this morning that the early buyer group was "older than our expectations . . . and bought a bit richer benefit plan.


In addition, the early buyer group in the six-month open enrollment period that began last October also had a higher usage of medical care services in the first two months of this year.


But the second wave of people who signed up for Cigna plans via the public exchanges was younger, Cordani said. "They bought leaner benefits," Cordani said.


By the end of 2014, Cigna expects 290,000 customers buying individual policies and 40 percent of them are purchasing "ACA policies," or policies subsidized under the Affordable Care Act.


In the company's first quarter, Cigna reported net income from operations of $501 million, or $1.83 per share compared to $387 million, or $497 million, or $1.72 per share in the first quarter of 2013. Revenues increased 4 percent to $8.5 billion.


Cigna is the latest insurance company telling a concerned Wall Street that they going to be able to manage the first year of risk from newly insured customers buying subsidized private health plans via government-run exchanges. Under the law, millions of Americans can get subsidies to purchase an array of health plan choices.


The improved forecast is the latest in a parade of rosy financial projections from health insurance companies benefiting from the health law. Other insurers doing well include Aetna (AET), UnitedHealth Group (UNH), Humana (HUM) and Wellpoint (WLP), a major operator of Blue Cross and Blue Shield plans under the Anthem brand that also raised its profit outlook this week.


More from Forbes


9Comments
May 1, 2014 3:58PM
avatar

Silly me, here I thought all this time Obama's plan was to make sure everyone has health insurance, now we see it is so rich insurance companies can get richer.

 

So glad the confusion has been clear up.

May 1, 2014 9:37PM
avatar
Obamas rich insurance cronies are getting richer thanks to obama while the poor and middle class suffer.

obama killed the middle class

May 1, 2014 3:53PM
avatar
Like most laws passed by our congress the ACA is a handout to the large corporations that lobby congress. Buying a congressmen is one of the best investments a company can make.
May 1, 2014 4:28PM
avatar
And the media throws even more gold paint on bulls**t in hopes of selling it...
May 1, 2014 2:56PM
avatar
If the imbecile Obama can get the stupid to sign up and pay far more than they should for a product, I am all for the Insurance Companies continuing to make EXTRA PROFIT at their expense.   Morons are always making bad deals, may as well take advantage of the dopes.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
279
279 rated 2
471
471 rated 3
714
714 rated 4
642
642 rated 5
604
604 rated 6
614
614 rated 7
450
450 rated 8
303
303 rated 9
115
115 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
ARCPAMERICAN REALTY CAPITAL PROPERTIES Inc10
BIDUBAIDU Inc10
CITCIT GROUP Inc NEW10
HPQHEWLETT PACKARD CO10
ITUBITAU UNIBANCO BANCO MULTIPLO S.A.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.