Cigna Told Congress Premiums "Reflect" Costs

Introduction

"Health insurance premiums reflect these underlying costs and unsustainable dynamics; they do not drive them." That is page 4 of the written testimony David Cordani filed with the House Ways and Means Committee on January 22, 2026, as chairman and CEO of The Cigna Group.

Six months later Cigna filed its second-quarter Form 10-Q. Cigna Healthcare segment revenue rose 9%, "driven by higher premiums (+$664 million), mostly within employer insured (+$305 million) and stop loss (+$259 million), primarily reflecting premium rate increases." Segment pre-tax adjusted income rose 17%, and Cigna reported the segment's pre-tax margin for the quarter at 10.9%, up from 10.2% a year earlier. If your health coverage comes through work, that segment is where your paycheck deduction lands.

Five CEOs and a Sentence on Page 4

That testimony came out of a two-hearing day. Cordani appeared before the House Energy and Commerce health subcommittee, then before Ways and Means, alongside Stephen Hemsley of UnitedHealth, Gail Boudreaux of Elevance, David Joyner of CVS Health and Paul Markovich of Ascendiun, per the Washington Times' same-day account. Ways and Means chairman Jason Smith said three of the largest health insurance empires "rake in nearly $1 trillion in annual revenue, pocketing tens of billions of dollars in profit."

What the CEOs said back is the industry's standing answer, and Cordani's written version is the tidiest statement of it. Hospital and drug prices drive national spending, and providers, his testimony says, "increasingly use sophisticated tools, including AI, to maximize billing opportunity and intensity, driving spending upward even when the underlying care does not change." Premiums follow all of that. He cites NAIC data showing industry-wide insurer profit margins fell to roughly 1.8% at mid-year 2025 even as premiums grew.

Read in context, page 4's sentence is a claim about what drives national health spending, not a promise about any one piece of Cigna's own book. Testing it against Cigna's segment margin is a fair reading. It isn't the only one available.

(In live questioning, Rep. Mike Thompson asked about AI being used to deny care, and Cordani said Cigna's prior-authorization AI "is never used for a denial." All five CEOs gave materially the same answer that day, which makes it a prepared industry line more than a Cigna-specific claim.)

One number frames everything below. Of Cigna's 18.413 million medical customers at June 30, 14.712 million sit in administrative-services-only arrangements, where the employer carries the claims risk and Cigna runs the plan. Another 3.701 million are in insured plans.

What the 10-Q Says About That $664 Million

Segment adjusted revenues came in at $11,728 million against $10,754 million a year earlier, and pre-tax adjusted income at $1,276 million against $1,094 million. Cigna reports the resulting margin itself, as a footnoted line in both the 10-Q and the earnings 8-K.

That comparison is clean, which matters more than it sounds. Cigna sold its Medicare Advantage, Part D, supplemental and CareAllies businesses to Health Care Service Corporation on March 19, 2025, and the deal closed before either quarter in the comparison began, so it isn't quietly inflating the quarter-to-quarter figures the way it inflates the six-month ones.

If premiums merely reflect costs, revenue rises to cover them and margin holds roughly steady. Cigna's filing shows profit rising faster than revenue in the exact part of the business it credits to premium rate increases. That sits in tension with page 4, which is a different thing from proving page 4 wrong.

Healthcare Dive put it plainly in its coverage of the quarter: Cigna's employer-sponsored plans "reaped higher profits than expected in the second quarter after hiking premiums." And Cordani himself, three months after the hearing, in Cigna's own first-quarter SEC filing: "Our strong first quarter results were driven by disciplined execution, deliberate portfolio shaping and a continued focus on targeted innovation."

The Medical Care Ratio Went the Other Way

Cigna's best rebuttal is sitting in the same filing.

The medical care ratio is the share of each premium dollar paid back out as medical costs. In the second quarter it rose 130 basis points, to 84.5% from 83.2%. In the U.S. Employer business, the six-month ratio rose 100 basis points, meaning more of the premium dollar went to care than a year earlier.

Stop-loss explains a chunk of the rest. It's $259 million of that $664 million, it's coverage sold to employers who carry their own claims risk, and Cigna has been openly repricing it since its 2024 medical care ratio ran into the low 90s on specialty-drug and high-acuity claims. Cordani told analysts in early 2025 the company expected to "recapture margin over the next two years." Brian Evanko, by then already named as Cordani's successor, told a Bank of America healthcare conference on May 13, 2026 that "2027 will be the final year of the margin recovery on our stop-loss portfolio." Premiums catching up to costs that already hit is close to what Cordani told Congress rather than a contradiction of it.

Costs also broke Cigna's way. GLP-1 prescription growth decelerated and outpatient and surgical spending came in under plan, per Healthcare Dive, while CFO Ann Dennison called the 84.5% ratio slightly ahead of expectations and inside full-year guidance of 83.7% to 84.7%, according to Investing.com's transcript of the call. Some of the margin move isn't premium at all: the segment's SG&A expense ratio fell 70 basis points, which the 10-Q credits to operating efficiencies and revenue outgrowing volume-related expenses. UnitedHealth, Elevance, Molina and Centene all posted the same beat-and-raise shape this cycle, coming off a year-plus when medical spending outran revenue across the sector.

The margin move from 10.2% to 10.9% is a small one. Take every one of those explanations at face value, though, and you're left with a description of the business Congress never heard in January: a repricing program steering toward a stated margin target, with costs landing under plan and expenses cut on top of it. That's premiums doing work Cordani's testimony never mentioned.

Who Benefits

Cordani's pay is the cleanest mechanism. Cigna's proxy statement puts his 2025 total compensation at $22,866,134 against median employee pay of $73,674, a ratio of 310 to 1, with roughly 92% of his target compensation for the year tied to performance. He handed the CEO job to Evanko on July 1 and became executive chairman at a $1 million salary with a $2 million annual incentive target, and the succession 8-K lets his 2026-2028 performance stock award keep vesting after retirement so long as he stays in service to the company for a year from the grant date. His most recent Form 4 shows about 658,302 shares held beneficially across direct holdings, a GRAT, a trust and his 401(k), worth roughly $191 million at spring 2026 prices.

Cover matters as much as the money here. "Premiums reflect costs" is the version of events in which a widening margin is something that happened to Cigna rather than something Cigna priced, and it's the version a CEO with performance stock still vesting has every reason to leave standing.

Evanko gets power and money on a faster clock. The board approved his package on February 25, 2026: $1.3 million salary, a $2.6 million annual incentive target, a $15.1 million long-term incentive target, plus a one-time $3.5 million transitional equity award. His first quarter as CEO beat estimates and lifted full-year guidance to at least $30.45 per share. Investors weren't uniformly impressed, for what it's worth, with shares falling 4.1% in premarket trading after the release, to $284.30 from a $296.47 close.

Outside the Reach of Rate Review

CMS's own issuer training material states the rule without hedging: "The Large Group market is not subject to the rate review regulation." Cigna's own words for where its premium growth came from are "employer insured" and "stop loss," and stop-loss is sold to employers carrying their own claims risk. Set that next to the customer split above and the shape is plain: most of Cigna's medical book sits outside the public rate-review process. No published justification, no percentage posted anywhere for a customer to object to.

The part that is reviewed looks very different. Cigna's Georgia rate justification, published because federal rules require it, proposed 2026 increases averaging 39.93% for 34,905 customers, ranging from 15.8% up to 65.3%. Its Arizona filing proposed an average of 33.78% for 2,533 customers, topping out at 42.87%. Across 312 ACA marketplace insurers, Peterson-KFF put the median proposed 2026 increase at 18%, the steepest since 2018.

Those documents exist, and you can sit down and read Cigna explaining in writing why an individual rate is going up. Cigna is leaving that market on January 1, 2027, a decision it announced in April and restated in the 10-Q. Its stated reason isn't regulatory pressure: the company says the individual book is profitable and it doesn't see a path to the scale that would justify staying, the same rationale it gave for closing its Medicare business. Take that at face value and the structure still holds. The one part of Cigna's medical business that publishes a written rate justification is the part being wound down, and the part covering most of its members never published one to begin with.

The Bottom Line

Page 4's sentence can be entirely true about national health spending and still fail to describe what happened inside the segment Cordani was there to speak for. The only public document reporting what happened to the premium dollar in that segment is a quarterly filing written for investors, and it says revenue grew 9% on premium rate increases while profit grew 17%. For the roughly four in five Cigna members whose employer carries the risk, that filing is the closest thing to a rate justification anyone gets to read.

A test is coming. Evanko has said 2027 is the final year of the stop-loss recovery, which puts an expiration date on the repricing explanation, set by Cigna's own CEO. If the segment margin keeps widening after that, the current account of why runs out. Those numbers get filed on schedule either way.