US health insurance company Cigna Group is considering selling its Medicare Advantage business, reported Reuters, citing undisclosed sources.
A divestment of the business could potentially bring in several billions of dollars for Cigna, the sources said.
Cigna has hired an investment bank to assess options for its Medicare Advantage business, which oversees government health insurance for individuals 65 years and over.
The sources said that Cigna could still choose to retain the business as talks are at an early stage with potential investors including other businesses and private equity groups.
Cigna entered the Medicare Advantage market in 2011 through the acquisition of HealthSpring in a deal valued at $3.8bn.
The health insurer’s potential retreat comes at a time when the US Government is becoming more frugal with how much it pays health insurers for their services.
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Commenting on the report, a Cigna representative said it is against company policy to comment “on rumours or speculation”.
In 2022, Cigna’s Medicare Advantage division made up 4.4% of the company’s total income of $179.4bn.
To be eligible for Medicare Advantage, customers must already be enrolled in Medicare, a federal programme primarily for Americans aged 65 years and older, as well as those with certain disabilities.
Last week, during its quarterly earnings call, Cigna said it has increased the geographic footprint from 20% of individuals eligible for Medicare Advantage coverage in 2019 to more than 40%.
Additionally, Cigna stated that Medicare Advantage’s profit margins in 2023 are still below its long-term goal of 4–5%, and this situation is expected to persist through 2024.
The company said changes in the US Government’s payment scheme and rising administrative expenses affected the unit.