Why Cigna isn’t joining the D.C., Md. health exchanges

Apr 30, 2013, 2:54pm EDT Updated: Apr 30, 2013, 3:13pm EDT

Why Cigna isn’t joining the D.C., Md. health exchanges

Julia Huggins

Ben Fischer

Staff Reporter- Washington Business Journal

Cigna, one of the few major insurance companies to decline to participate in the D.C. health insurance exchange, has also said it’s not joining the Maryland and Virginia programs immediately either.

In this region, Cigna has focused on large employers, so its abstention is not shocking.

But I sat down earlier Tuesday with Julia Huggins, the Mid-Atlantic market president for Cigna, to elaborate on that strategy. Huggins recently got new responsibilities when the health insurance giant expanded her duties to include Ohio, Delaware, Pennsylvania and West Virginia, in addition to Maryland, D.C. and Virginia.

Why is Cigna not participating in the D.C. and Maryland insurance exchanges? As you know, Cigna has not played in the individual and small group market in every state in the country, and we had very few states where we actually did have a small group and individual product we were offering. In states like Maryland, D.C. and Virginia, we do not offer individual products. We had to first look at [in] what states do we have individual and small group plans, and that was one criterion we looked at when we decided.

We have a bit of work to do, because we have to file for [permission for] those products before we can actually consider entering the exchange space. We’ve been very disciplined, starting with that as one of the first benchmarks: Do we have an individual market or small group market product to leverage in the exchange? And D.C. happens to be one of those markets where we don’t have an individual product or small group product, so we have to build that platform first.

Also in D.C., we looked at certain principles and features the exchange offers — and because they’re not offering them today, that doesn’t mean they won’t change. We want to ensure a level playing field and make sure the exchange supplements the existing marketplace rather than replace the existing marketplace. We are also looking for exchanges that promote competition and have consistent participation across health plans, and we want to look for an exchange to ensure meaningful choice for consumers. And we also look for exchanges that promote quality and improved health outcomes. Those are the foundations of Cigna’s philosophy.

Do you have the same objections in Maryland? I don’t know if I’d call them objections. It’s principles we look for. And again, we’ll continue to monitor them, because I know there are still decisions to be made in D.C. And we do think some exchanges will evolve, and we’ll continuously look to see if it’s evolving in a way that could make it a good opportunity for Cigna.

I’ve been in the committees in Maryland, and the same foundations exist. We are working on individual offerings, but we don’t have that today. So I have to start there first, but our intent is to do what we need to do so we could potentially enter the Maryland market in 2015.

What are the differences between Maryland and D.C.? The four things I told you about are present in the Maryland exchange philosophy, and the way it’s being built. It’s intended to supplement, not replace. It is intended to promote choice for consumers; it’s intended to have some quality metrics built in for consumers to make choices around carriers. So it has the foundational principles that we’re looking for.

And D.C. doesn’t? And from what we’ve seen so far, we have more concerns around the way D.C. is being structured, let’s put it that way.

How long does it take to launch individual and small group products in Maryland? It depends on how long it takes for the filings to be approved and deciding what products we want to introduce from an individual perspective. I’ll tell you we’re father along in Maryland, because of the way it’s structured in D.C., I’m taking more of a wait-and-see approach in D.C.

What about Virginia? As you know, they’re kind of in a hybrid. They originally said they weren’t going to start an exchange; now they’re saying they want to go into the federal exchange in 2014 and then maybe develop something later. We’re very much engaged in doing the appropriate filings for products we may need to be ready to consider.

Is participating in the exchanges ultimately necessary for Cigna to accomplish its goals? I think we could accomplish our goals by focusing on large employers. We think it’s an untapped marketplace for us. We do believe Cigna has a lot to offer to smaller and individual markets. And it’s not that we’re not in that space; it’s just that we’re not in that space in this market. We’re taking those lessons learned, and we’re looking at where do we expand because we have had success in other states.

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