Cigna sells Medicare business to HCSC for $3.3 billion

Cigna has cashed out of the Medicare game.

On March 19, Blue Cross Blue Shield licensee Health Care Service Corporation (HCSC) announced it had completed its $3.3 billion acquisition of the Cigna Group’s Medicare Advantage, Medicare Supplemental Benefits, Medicare Part D, and CareAllies businesses.

Cigna had 3.6 million Medicare members across its plans, including nearly 600,000 in Medicare Advantage, HCSC said when the agreement was first announced in January 2024.

Now that the deal’s closed, HCSC will serve 26.5 million people, including 4.3 million Medicare members. Cigna said in a Wednesday press release it will use the majority of the sale’s proceeds for share buybacks.

Tell me more. Cigna’s sale comes as health insurers across the nation grapple with market disruptions like high medical costs among government plan members and drops in Medicare Advantage star ratings.

Cigna’s medical cost ratio—the amount spent versus earned from enrollees—was 83.2% for 2024 compared to 81.3% in 2023, according to its earnings report released in January.

The company said that was mostly due to higher costs from its stop-loss medical insurance, a product that protects employers who self-fund their employees’ plans by paying medical costs that exceed a certain dollar amount each year. The company reported $247 billion in revenue for the year, up nearly 27% YoY.

Cigna’s Evernorth Health Services—including Express Scripts, one of the largest pharmacy benefit managers in the country—is to serve its now-sold Medicare business for four years, Modern Healthcare previously reported.