We Americans —and our courts— take a dim view of extortion, which is loosely defined as trying to get something by force or threat. But when corporations are accused of trying to get something by force or threat, we tend to look the other way. There is even a risk of calling out corporate executives when they make threats, as Connecticut State Comptroller Kevin Lembo learned recently.
Lembo disclosed in an interview with the Hartford Courant, days before the end of the Connecticut legislative session, that Cigna CEO David Cordani threatened to send a public letter to Gov. Ned Lamont saying the company would reconsider where it is “domiciled” if the legislature passed a bill to establish a health insurance plan that would be operated by the state, the so-called “public option.”
But, at least in the opinion of some in state government, it was Lembo who had done something wrong. The headline in the June 1 Middletown Press told the tale: “As diluted health reform bill advances, some blame Lembo.” Lembo’s sin, it seemed, was shedding light on how big corporations wield their influence in Hartford.
A few days after that headline, the CT Mirror revealed that Cigna had once again thrown its weight around the capitol to get special consideration. Reporter Mark Pazniokas figured out that because of the precise wording of two paragraphs on page 547 of the state budget, Cigna, and only Cigna, would score a big favor. Those paragraphs give Cigna an additional five years to claim millions of dollars in tax credits.
In 2011, Cigna became the first recipient of taxpayer dollars under a Malloy administration program that awarded tax credits and other assistance to employers that agreed to create 200 jobs in the state. As the CT Mirror noted, Cigna was promised $21 million in grants and forgivable loans — plus up to $50 million in urban reinvestment tax credits— in exchange for promises to add jobs and make other investments in the company’s Connecticut operations.
It is not just state lawmakers that Cigna is putting the squeeze on. Last month, The Hartford Courant reported that Cigna is seeking a seven-year, 50 percent abatement on real estate taxes from the town of Bloomfield in exchange for a commitment to spruce up its headquarters building.
You might think that by asking for all those special favors from local and state governments Cigna was having a hard time making ends meet, that it couldn’t otherwise afford to add jobs and improve working conditions for its employees.
If you think that, here are some facts and figures you might want to consider. All are based on public disclosures made by the company:
$21.5 billion —That’s the profit Cigna has made over the past 10 years (since Jan. 1, 2009), based on revenues totaling $229 billion. Now that Cigna has completed its merger with pharmacy benefit manager Express Scripts, Cigna executives predict profits and revenues will soar. They say earnings for 2019 alone could reach $6.4 billion on revenues of $133.5 billion.
$8.2 billion— That’s how much Cigna has spent since 2008, the year I left the company, buying back its own shares instead of investing in business operations. In 2017 alone, the company spent $2.86 billion buying back 15.7 million of its own shares. Share buybacks —which boost earnings per share (EPS)— are a way of rewarding shareholders and executives. When companies repurchase their own shares, the number of shares outstanding decreases, making each remaining share more valuable.
1,800 percent—That’s how much Cigna’s shares have increased since 2008. You could have bought a share of Cigna stock for $8.75 in November 2008. This past Friday, June 7, 2019, a single share would have cost you $157.47. If you had bought $60,000 worth of Cigna shares when it was $8.75, you’d be a millionaire today.
$161 million—That’s the amount of money Cigna has paid to CEO David Cordani over just the past five years. Cordani’s compensation in 2017 alone was $44 million, or almost $3.7 million a month. As Axios’s Bob Herman reported, for every $1 the average Cigna worker made in 2017, Cordani got $697. Cordani often makes more annually than the CEOs of much larger companies, including insurers Anthem and UnitedHealthcare and drug makers Astra Zeneca, GlaxoSmithKlein, Eli Lilly and Merck.
2,867— That’s the number of Cigna jobs that have disappeared in Connecticut since 1990, when the company said it had 7,467 employees in the state. The trend has been downward ever since. When I joined Cigna in 1993, the company reported 6,751 employees in Connecticut. A letter the company drafted for employees to send to legislators opposing the public option last month put the current total at 4,600.
Bottom line: While Cigna’s profits and revenues have been growing by leaps and bounds — by the billions of dollars annually— the company has been slashing its Connecticut workforce and audaciously taking tax money to restore a handful of those jobs. And know this: while some of the shrinkage came as a result of selling off some business operations, Cigna has also automated many functions and outsourced or offshored hundreds of jobs. Many Cigna jobs once held by residents of Connecticut and other states have in recent years been shipped to the Philippines, India and Costa Rica.
In addition to cutting jobs in Connecticut, the company has also stopped selling coverage directly to individuals and families in the state, which makes one wonder why Cordani threatened to reconsider the company’s decision to be based in Connecticut if lawmakers created a public option.
I suspect it is because he fears that Americans would see that the government can provide better coverage at lower cost than private insurers, thereby exposing what is becoming increasingly evident: private insurers are an unnecessary and unsustainably expensive middleman that serves no one very well. No one, that is, except, shareholders and company executives like David Cordani.
Wendell Potter is the former Vice President of Communications at Cigna. He is currently President of the Business Initiative for Health Policy.
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“The real fear: We see that government can do better” – You better have some examples of government doing a better job than the public sector on anything. I mean any-frigging-thing! They simply don’t exist. Government destroys everything it touches, it has the anti-Midas touch. Everything it touches turns to “junk” (I had a better word, but I don’t want my comment removed)
You really have to apply some common sense before saying things like that. Compare the DMV with Amazon -Who do you think could do the job better? How about the USPS and Federal Express? How about the Department of Children and Families and the worst run private company in the world. In each of these comparisons the government get beaten badly.
Think first. If the entire arugment is that CIGNA is making money – What kind of criticism is that? And to be ragging on the shareholders of CIGNA? And who are those shareholders, probably the very same union pensioners who are doing such a loousy job at DMV, and USPS and DCF.
So… you’d prefer private for-profit military, rather than having the incompetent wasteful US government military do the job? After all, defense is pretty important, can’t let the government do their bad job on it.
Cops too; not to mention firemen.
And food and drug testing.
And let’s not get into streets and roads. Let everybody subscribe to whatever private road and street network they want to, and let the free market sort out the best.
I don’t think anyone is seriously thinking about competing with DoD to produce a private military. The point is, Connecticut continues to shed executive level jobs to Boston and NYC. The current ruling class is incompetent but somehow they thing being elected makes the experts in running business, becoming developers, and being taken by others who run rings around them.
Good point. No I would not be in favor of a private military, and here are the reasons. Why is govt so incompetent? – It is the way it is set up., here is the big difference between military and other govt employees. – If you’re in the military you CAN be fired, demoted and disciplined, in the public unions you cannot, this produces a lethargic, “who cares” attitude. Second, conversely, if you do a good job you get promoted in the military, in the public sector you get promoted automatically after a certain time, which is a great disincentive to “do your best” which produces the “why bother” attitude that we have all experienced at the DMV. Lastly, in the military since it is a meritocracy only the best of the best become general or other responsible positions. In the public sector most of the top positions are appointed and are unelected. A good example is that of the DCF. Malloy appointed Commish Katz who was a federal judge without any experience in social work – the result two children died under avoidable circumstances during her tenure. It is the same thing with the other professions (cops, fire)that you mentioned which are run more like privately sector companies than public employees. The last point is that the military is not unionized, the unions produce conditions like an ocean convoy of ships. If they are to stay together everybody must slow down to the speed of the slowest boat, it is the same in the unions. Hope that helps expplain my position. Thanks zzz05.
This article details multiple instances of “corporate socialism”, where we the taxpayers are actually contributing to the company’s bottom line. Why isn’t this a huge problem for you? The argument isn’t that CIGNA is making money, it’s that they’re gaming the system at our expense, and that they’re afraid of competition. If you’re so certain that “government destroys everything it touches”, then you shouldn’t be afraid of letting us try a public option. If we fail, you’re right, but if we succeed, then you’re wrong. Let’s let the market decide.
Take a look at the Dept of Children and Families. An agency run by the government, and up to recently had at the helm commissioner Katz, who was a federal judge with no experience in social work and during her tenure two children died needlessly due to incompetence. That is exactly why I would not give the public option a try. Healthcare is critical. It is bad enough the government runs the DMV in which at worst some poor sap waits a week to get the wrong driver’s license, with healthcare people may die if I am right.
Other countries have various healthcare systems ranging from full “single payer” systems to more public/private hybrids. They do just fine, and pay much less for their healthcare systems as a % of their GDP than we do (~12% vs ~18% for us).
Examples are not hard to find. One has to be blinded by ideology (“the private sector is *always* better” for example) not to easy find them.
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