On Cigna’s big objection to the ‘public option’
Its real fear: We will see that government can do better
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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