(New throughout, adds details and background on Obamacare plans)
By Caroline Humer
Oct 30 (Reuters) - Cigna Corp. said on Thursday that financial losses from the new Obamacare health insurance eased in the third quarter, becoming the second insurer this week to say that business was improving.
The U.S. Affordable Care Act, often called Obamacare, created national exchanges that sell health plans to individuals regardless of age or health. Previously, individual plans could deny coverage to people and charge more based on age, health or gender.
Cigna, Aetna Inc and Humana Inc have said since the beginning of the year that they were posting losses on the plans because their patients were older and sicker than what they had anticipated when they set premiums. Others, like WellPoint Inc., are making a profit, a fact WellPoint confirmed this week was the case in the third quarter. Humana reports next week.
This week, Aetna said it had signed up more patients than it expected and it began making a slight profit on the business during the third quarter as the high volume helped defray fixed costs.
On Thursday, Cigna CEO David Cordani said that while it was still losing money on the new patients, the rate of losses had slowed with a decrease in medical use by the first group of customers who had coverage in January as soon as the plans were available.
A second group who signed up later and appeared to be skewing to be healthier were also using medical services at a lower rate, he said.
“The rate of loss decreased somewhat, but it is still a loss,” Cordani said in an interview. “There was somewhat of a decrease in the rate of acceleration of service consumption and a little more visibility into (government risk payments).”
Cigna, which manages insurance plans for large corporations for a fee and sells health plans on the government exchanges created under healthcare reform as well as dental and other benefits, said the company’s total revenue increased to $8.8 billion from $8.1 billion.
The company said revenue was held back by its exit from limited benefit plans, which are no longer allowed under Obamacare. It also said premium rates were pressured in its Medicare business for older people and the disabled.
Cigna had 14.4 million medical customers at the end of September, up about 100,000 from a year earlier.
The company reported a profit of $1.95 per share, excluding investment gains and the business it is exiting. That is ahead of analysts’ estimates of $1.82, according to Thomson Reuters I/B/E/S, and up from $1.89, also excluding items, a year earlier.
Net profit was $519 million, or $2.01 per share, compared with $553 million, or $1.95 per share, a year earlier. (Reporting by Caroline Humer; Editing by W Simon and Lisa Von Ahn)