In Illinois, a dark horse enters the health insurance race

Cigna jumped into unfamiliar and risky terrain in Illinois last year: It joined the Obamacare exchange after many insurers had tried, failed and fled.

And while individual customers aren't Cigna's forte, the insurer hit its small goal, capturing about 25,000 consumers in its exchange debut. It's not much to brag about, attracting just 7 percent of the roughly 351,000 people who have signed up statewide since enrollment began in November. But it's a jump-start for Cigna, which wants to shake up both its business model and the Blue Cross & Blue Shield-dominated Illinois market.

The bulk of Cigna's Midwest business is midsize and large employers, including the Chicago Transit Authority, which left Blue Cross for Cigna three years ago. "My goal is to continue to go deep into other pieces of the puzzle and figure out the value proposition I'm offering the market," says Michael Phillips, Chicago-based president of Cigna's Midwest market, a five-state network that includes Illinois. "A piece of that is the exchange."

While other insurers are fleeing Illinois' public exchange, Phillips, 52, sees it as ripe for experimentation, even as health care organizations and consumers brace themselves for tumultuous changes under a Trump administration. The Republican president-elect and his party-controlled Congress have vowed to repeal the landmark health reform law known as Obamacare, which created public health insurance exchanges nationwide four years ago.

For Bloomfield, Conn.-based Cigna, 2017 could usher in even more sweeping change: a merger with Indianapolis-based Anthem to become the largest insurer in the nation. The U.S. Department of Justice is vigorously fighting the marriage, for now.

Cigna is known for helping companies and their workers tackle medical costs by offering programs that focus on expensive and time-consuming diseases like diabetes. The insurer was an early adopter of paying doctors and hospitals to focus on prevention by hiring care coordinators to better track patients and keep them out of the hospital.

Phillips mentions some successes, cutting hospital admissions by 17 percent year over year at northwest suburban hospital network Amita Health; reducing blood sugar levels among 1,200 employees and their family members at Mulzer Crushed Stone in Tell City, Ind.; and helping 79 percent of employees at New York advertising software firm Media-ocean, which has a Chicago office, meet their cholesterol goals.

While many insurers share claims data to help physicians keep closer tabs on how their patients use medical care, Amita executives tout the depth of data Cigna provides. For example, Cigna tells Amita which employers have the most people who see its doctors. That can help Amita open clinics and offer programs closer to where those patients work. "We don't get that information from other (insurers) in the market," says Ryan West, vice president and chief operating officer of population health at the Arlington Heights-based hospital network.

Nationally, Cigna's clients have achieved the lowest medical cost trends among the four leading insurers, the Justice Department notes in a recent court filing. Cigna cut $1.4 billion in health care spending for its clients from 2012 to 2014.

Still, Cigna has one of the smallest market shares in Illinois among insurers with a national footprint. Take the carrier's specialty, the midsize and large-group market, where it provides coverage for between 400,000 and 500,000 people who work at companies with up to 5,000 employees. Blue Cross dominates, with 69 percent of the market; UnitedHealthcare, 12 percent; and Aetna, 3 percent. Cigna has carved out barely 1 percent in Illinois, according to the National Association of Insurance Commissioners.

"When you look at the Blues plan in Illinois, it's a very strong competitor," says Mark Rouck, a senior director at Fitch Ratings. "That might make it a little more difficult in terms of anyone else" competing.

Joining the Obamacare exchange is part of Phillips' play. Cigna is offering plans that, in exchange for lower premiums, limit consumers to two networks: Presence Health and Amita Health. While vast, including 18 hospitals and dozens of outpatient sites stretching from the northwest suburbs to downstate Urbana, the network is thin compared to others. Blue Cross' PPO plans may lack many popular Chicago academic medical centers, but its broadest plan on the exchange includes about 150 hospitals across the state.

Phillips doesn't see Cigna's late arrival to Illinois' exchange as a disadvantage but rather an opportunity to learn from other carriers that crashed and burned after pricing plans too high, or too low, and that lost millions of dollars on patients who were sicker than expected.

"They're willing to invest a little bit in (the exchange) but keep the exposure manageable for their overall book (of business)," says James Sung, associate director of insurance ratings at Standard & Poor's Financial Services.

Despite Republicans' eagerness to dismantle health reform, enrollment on the federal exchange attracted 8.8 million people as of Dec. 31, about 2 million more than the previous year at this time. "There's definitely a demand for it," Sung says.

Phillips, meanwhile, says he isn't focused on market share and being the biggest in Illinois. Simply put: "I'm trying to be the best at everything I do." As for how the insurer will play catch-up in a market dominated by one big player, Cigna will learn its fate shortly. A judge is set to rule on the proposed Anthem merger as soon as this month.

"In Illinois, a dark horse enters the health insurance race" originally appeared in Crain's Chicago Business.