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Cigna Offloading Medicare Biz to Health Care Service Corp in a $3.3 Bn Sale

Written by : Aishwarya Sarthe

February 5, 2024

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The announcement, made on January 31, marks a significant shift in Cigna's focus within the healthcare sector.

In a major strategic move, Cigna, the Bloomfield-based health insurer, has finalised a deal to offload its Medicare businesses to Health Care Service Corporation (HCSC) for a staggering $3.3 billion cash deal. The announcement, made on January 31, marks a significant shift in Cigna's focus within the healthcare sector.

The Chicago-based HCSC, known for its Blue Cross Blue Shield plans in five states, is set to acquire Cigna's Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D, and CareAllies businesses. The total transaction value stands at an impressive $3.7 billion.

Cigna's chairman and CEO, David M Cordani, noted that the agreement positions Cigna to drive substantial value for stakeholders. He underscored the opportunity to accelerate investment and growth in services while reaffirming commitment to existing health benefits platforms. 

Cordani said, "While we continue to believe the overall Medicare space is an attractive segment of the healthcare market, our Medicare businesses require sustained investment, focus, and dedicated resources disproportionate to their size within The Cigna Group's portfolio."

Details of the Deal

According to a press release shared on PR Newswire, the definitive agreement outlines a four-year services agreement between Cigna and HCSC. Evernorth Health Services, a subsidiary of The Cigna Group, will continue providing pharmacy benefit services to the Medicare businesses under this agreement. The transaction is expected to close in the first quarter of 2025, subject to regulatory approvals and standard closing conditions.

Commenting on the same, HCSC's CEO, president, and vice chair, Maurice Smith, said, "At HCSC, we have a history of fostering optimal health, driving healthcare innovations. This acquisition brings opportunities – a wider product range, robust clinical programs, and expanded reach. We're committed to affordable, quality care, prioritising community-first engagement, and delivering differentiated value."

Strategic Implications and Financial Impact

Cigna's decision to divest its Medicare lines, including Medicare Advantage, Medicare supplement, and Medicare drug plans, as well as CareAllies, reflects a strategic shift. This move comes after Cigna's entry into the sector with the $ 3.8 billion acquisition of HealthSpring in 2011.

The sale allows Cigna to free up $400 million in financial reserves, contributing to a total effective transaction value of $3.7 billion. Cigna's Medicare Advantage business, which generated 4.4% of the company's $179.4 billion revenue from external customers in 2022, served 3.6 million Medicare members.

The deal leaves Cigna without a foothold in a sector traditionally a major growth engine for health insurers. The Medicare business faces challenges with rising medical service utilisation, impacting costs for insurers. Humana, the second-largest Medicare insurer, recently reported significant losses, casting a shadow over the sector.

Cigna Healthcare, a part of The Cigna Group, is a global health service company with a strong presence in the United States and a global reach, serving over 180 million customers and patients worldwide. 

With over six decades of experience in designing, implementing, and managing international group health insurance and employee benefits programs, Cigna Healthcare caters to European corporations, international organisations, and governments. It operates through its offices in the United Kingdom, Belgium, Spain, Kenya, Dubai, the United States, and Malaysia. 

Market Impact and Future Outlook

HCSC's acquisition of Cigna's Medicare businesses positions the company as the country's largest customer-owned health insurer, serving over 22 million people across the United States. The move aligns with HCSC's commitment to local relationships and community-first engagement models.

As the transaction progresses, the healthcare landscape will likely witness shifts in product offerings and geographic reach. The strategic realignment reflects the dynamic nature of the industry and the pursuit of innovative solutions to address evolving healthcare needs.

This development follows Cigna's November 2023 discussions about a potential merger with Humana, which could reshape the US health insurance landscape. 

The proposed merger, valued at over $60 billion, is anticipated to undergo rigorous antitrust scrutiny, given the regulatory environment established after previous consolidation attempts were rejected.

About Chime India

The College of Healthcare Information Management Executives (CHIME) is an executive organization dedicated to serving senior digital health leaders. CHIME includes more than 5,000 members in 56 countries and two US territories and partners with over 150 healthcare IT businesses and professional services firms. CHIME enables its members and business partners to collaborate, exchange ideas, develop professionally and advocate the effective use of information management to improve the health and care throughout the communities they serve. CHIME's members are chief information officers (CIOs), chief medical information officers (CMIOs), chief nursing information officers (CNIOs), chief innovation officers (CIOs), chief digital officers (CDOs), and other senior healthcare leaders. The CHIME India Chapter became the first international chapter outside North America in 2016 and is now a community of over 70+ members in India. For more information, please visit


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