Cigna CEO: Don't repeal U.S. health law

NEW YORK Tue Nov 9, 2010 12:45pm EST

NEW YORK (Reuters) - Repealing the new U.S. healthcare law would be a waste of time, but there is room to improve it, the chief executive of health insurer Cigna Corp (CI.N) said on Tuesday.

"I don't think it's in our society's best interest to expend energy in repealing the law," David Cordani told the Reuters Health Summit in New York. "Our country expended over a year of sweat equity around the formation of it."

Debate over the law, passed in March, has reignited after Republican gains in last week's congressional election. The party promised to overturn the overhaul, but some leaders have backed off, saying they would target specific changes and funding.

Republicans took control of the U.S. House of Representatives, but Democrats maintained control of the Senate and still hold the White House. Both chambers would have to approve revisions, with President Barack Obama likely to veto any changes to what has been a major domestic win for his administration.

Cordani, whose company is one of the largest U.S. health insurance providers, said he does not see any immediate significant changes and is "knee-deep" in implementing various provisions affecting his company and other insurers.

The law enacts big changes on insurers, from billions of dollars in new taxes and consumer protections to spending caps to ensure a minimum amount of premium dollars are spent on medical care. It also aims to expand health insurance to roughly 30 million more Americans, requiring them to buy policies or face fines starting in 2014.

Still, Cordani said there is room to do more to further contain the United States' spiraling healthcare costs, such as expanding more consumer-directed options like health savings accounts and improving the nation's payment system.

Such changes should not be partisan, however, he said.

"Our orientation is a little agnostic of how you get there," Cordani said at the summit.

SPENDING RULE PHASE-IN

Many new rules for insurers, such as a ban on policy recissions and a mandate to cover children with pre-existing conditions, began in September. Others, such as new spending rules, start in January, weeks before Republicans take over the House.

The impact of the overhaul on Cigna's 2011 business is unclear. Two major issues that could still weigh on their operation include yet-to-be finalized rules on insurance spending and changes to medical costs.

Several more weeks likely will pass before insurers see the final spending rules from U.S. Health Secretary Kathleen Sebelius, Cordani said after meeting with her on Monday.

Under the law, starting January 1, insurance companies must direct a minimum amount of customers' premium dollars toward covering medical care rather than administrative costs or profits -- or else give policyholders a rebate.

Such spending, known as the medical-loss-ration, or MLR, has been a key profitability signal for Wall Street and also helps set insurers' monthly premium rates.

Critics have said the limits will put some insurers out of business, especially in smaller markets, and that there is not enough time for companies to make the changes. The Obama administration has yet to announce final details, but Cordani said his company is preparing for various scenarios.

Cigna, which offers larger nationwide policies, wants more time for companies to implement the MLR rules before other major reforms hit in 2014.

"The administration understands the predicament," Cordani said. "A phase-in process will help to minimize the impact."

Of particular importance is how the administration applies the MLR -- or doesn't -- to one key part of Cigna's business: health insurance plans that companies offer to U.S. workers based in other countries.

A group of U.S. state health insurance commissioners advising Sebelius has said the rules could hurt such unique coverage, which can involve complicated situations such as flying patients elsewhere for care.

Most companies offering them are not based in the United States. If Cigna's offerings are subject to the MLR rule, "We will have a competitive disadvantage," Cordani said.

(Reporting by Susan Heavey. Editing by Matthew Lewis and Robert MacMillan)