Why Cigna’s CEO Is Confident We Can Fix American Healthcare

0:02This week on Bold Names, we're talking to David Cordani. He's the chairman and CEO of Cigna, one of the U.S.'s biggest health insurers. Now joining me to talk to David is another David, my colleague David Wainer, who is a healthcare columnist for The Wall Street Journal. Really excited to talk about our fast-changing health system. That's next. From The Wall Street Journal, I'm Tim Higgins. This is Bold Names, where you'll hear from the leaders of the bold name companies featured in the Wall Street Journal. Today we ask a big question. How do we fix the American health care system?

0:42David, thank you for joining us on Bold Names. I'm really interested in one of those areas that I know you're passionate about, which is mental health care. How did this become top of mind for you? So a couple of points. When you enter the healthcare conversation, the modern view of life is that the physical health and mental health aspect of a human being are inextricably linked. For all too long, our society separated those of you have a physical ailment, go see a medical doctor. You have a mental ailment, go see a mental health professional. But physical health and mental health are inextricably linked.

1:16So guided by our mission, we lean into that pretty meaningfully. And when you step back, you could look at our society, the U.S. alone, whether we want to talk about the global society, and recognize that early onset of mental health challenges, be they anxiety, stress, or early stage depression, have a significant impact on an individual's health, well-being, if they're employed, their sense of belonging, productivity, and overall engagement. For those who are watching, those who are listening who don't know what Cigna is, a big part of your business, Cigna Healthcare, is the insurance arm, which provides medical, dental, and vision benefits through employers to their employees.

1:56This is a way that a lot of people access the healthcare system in the U.S. It's one of the largest in the U.S. And that puts you in a position, I think a unique position. You're hearing from the CEOs of big companies, and my understanding is that they've come to you with concerns about the mental health of their employees. What have you been hearing, and when did you start hearing it? So increasingly, and amplified through the pandemic, more and more employers at the CEO level realized they had a significant mental health and mental well-being challenge. And they were looking and exploring and open to alternative ways to help to address that.

2:35So beyond dealing with sickness when it transpires, how do you have programs to have early identification of, as I mentioned before, anxiety or elevated stress levels, which are gateways to depression, which are gateways to more elevated mental health and physical health challenges? So when you think about it, there's a couple of different dimensions that exist. First, over a long period of time, less so today, there was a stigma to having the mental health topic attached to an individual. Second is just pragmatic access. In many cases, mental health professionals, therapists, starting from that dimension, are smaller operations, and there may not be the physical proximity or ease of access to those mental health professionals.

3:22So de-stigmatizing, awareness, and easing access. How do we ease access? making sure there's a physical network or the ability to access a mental health professional. Secondly, a virtual network, because virtual works quite well for many aspects of mental health or mental health therapies. In fact, some people prefer that because it's a level of anonymity. So stigma, awareness, physical access, virtual access all have to come to bear. As Tim mentioned, Cigna is focused on employer plans. Why prioritize this segment? A few reasons. One, first, it's important to recognize that the U.S. employer market is the backbone of the U.S.

4:05healthcare ecosystem. Point two is that each employer presents an example to form a micro-community. And we have the ability to work employer by employer to understand their culture, their strategy, the respective health burden of their population. and we've proven time and time again that yields a more positive result. And lastly, we have been an outlier in that we've been committed to what are the more transparent programs like self-funded. So there's total transparency between ourselves and the employer to where and how their dollars are being spent and what the impact of those dollars are, which allow us to change or modify or tweak the programs throughout the course of the year, as opposed to wait to the end of the year and evaluate it.

4:46Tell me what has worked for Cigna when it comes to promoting mental health. Sure. And I'll just add a few building blocks. Now, you put it under an umbrella of awareness and open dialogue. So back to that mission of improving health and vitality, we talk in our organization around that broader set of needs. Access to therapists, access to counselors, access to virtual resources. And importantly, the add I would give to it is a significant amount of energy around community activation and belonging. It's proven that having individuals have access to micro communities within their place of employment and then activating in their community through voluntarism creates a net positive mental health and overall productivity.

5:34Not only are you dealing with CEOs as the CEO of Cigna, but you're also on the business roundtable. And I know that part of your effort there is working on mental health for that group, which is really kind of the mouthpiece for big business in Washington, D.C., working on issues that are very important to CEOs, whether they're political or social. It's an area where I'm quite proud. I'm quite proud of the business community leaning in versus observing. So the business roundtable that is approximately 250 CEOs. I mean, these are the biggest of big companies, right? You got Mary Barrow from General Motors, Tim Cook from Apple.

6:10I mean, these are the boldest of bold names as yourself, among yourself. And a cross-section of every industry represented there. Confronted with the information, identified this as an important initiative and undertaken. I have the good fortune of being the chair of that initiative. So what has that done? It's created more awareness. It's created more information share and it's created more training. We've even had a mental health first aid training that has been delivered to many corporations. So net positive in terms of seeing that body of leaders lean into this, whether you lean into it in terms of making your business more vibrant or lean into it to make your community more vibrant.

6:48They intersect at the same level of actions and we're seeing good momentum there. Yeah, I want to talk about cost. You were just in D.C. testifying before Congress earlier this year about why health care has become so expensive in the U.S. And a stat really stuck out to me that the average family health insurance plan now costs more than$26 ,000 a year. And that, I guess, leads to the question in my mind, why have costs gotten so expensive? First, there's clearly an affordability challenge across the United States. If we want to understand the core aspects to why, you could break it into two fundamental categories, which doesn't excuse it, but you need to understand the fundamental categories so we can address it.

7:28First, on the demand side, we are demanding and consuming more services. That is in part driven by the aging of the population. That's a global phenomenon, but also a U.S. phenomenon. And consumption grows as age grows on average. Second, in excess of 50 % of Americans are dealing with chronic health situations. We've had an explosion in chronic care issues in America. So that's on the demand side. On the supply side, new pharmaceuticals, while in some cases life-saving, life-sustaining, or life-improving, are at a higher and higher cost every year. Can you pinpoint the moment when this started to be the case, when the system began to crack, if you will?

8:12I can't pinpoint the moment with precision, but if you go back into the 70s timeframe, the rate of medical cost growth, more so approximated inflation growth. So a little bit greater, but more approximated inflation growth. As you come forth to the last 25 years, the rate of medical cost growth, and I mean medical costs in the broader medical pharmacy, behavioral cost growth is running at about 3x the rate of inflation, three times the rate of inflation for the last couple of decades and a half. So we could look at the last 25 years where that multiplier effect has transpired. And there's two constants that are indisputable in there.

8:55The global health profile relative to chronic conditions has eroded. And the US leads, unfortunately, in some of those categories. There's higher medical cost consumption that are attached to that. And secondly, the higher cost interventions have grown in the last decade or two even more rapidly. Those are the two triggers that are driving the acceleration. After the break, we asked David what role insurers play in bringing down health care costs. We need to do a better job creating a seamless experience for the benefit of the patient. Full stop. Stay with us.

9:42I'm just curious, as you look at this, what kind of role or responsibility insurance companies have in bringing down these costs? So the question comes down to how do you bring down the cost or how do you slow the rate of growth? And I think there's four major ways you do so. One, you invest time, effort, and energy to help to keep the healthy healthy in the first place. The US spends the vast majority of its resources fixing sickness after it occurs. We need to spend more resources on helping individuals maintain their health. We're really good at sick care intervention at the end, right? We're not good at maybe on the front end of taking care of health, right?

10:24100 percent. 100 percent. Second, the category least spoken about is any group of individuals, you could take the country as a whole, we could take a state, you could take a city, you could take an employer, has a percentage of the population that appears to be healthy because they have low medical cost claims or very little, but they have high health risks because of lifestyle, behavior, or genetic predisposition. Good health service programs could help to identify those risks before they blossom in a chronic event or into an acute event. You could see pre-diabetic. You could see pre-coronary disease.

11:01You could see a high-risk maternity event and intervene and help a mom go full term, which is in everybody's best interest, starting with the health of the baby and the family unit and the community. So advancing around the healthy at risk. In the case of the chronic population, the evidence-based care needs to be followed. It's something where the health service companies like ourselves do a great job. And that is typically medication compliance. If you're a diabetic, being consistent on your medication is mission critical. If you're on a coronary clinical management program, medication consistency is mission critical around your cholesterol-lowering medications, et cetera, et cetera.

11:43One of the things insurers get criticized for is their use of prior authorizations. Basically, that's the requirement that doctors get approval from the insurance company before providing certain treatments. How do you think about the way these prior authorizations are currently working? So prior authorizations are part of how the system works today, not justifying it. It's just part of how the system works today, whether it's the commercial employers or the Medicare system. We need to do a better job creating a seamless experience for the benefit of the patient, full stop. We made a commitment as an organization in the first quarter of last year to do just that.

12:21So we can do better. We are doing better and we need to do better. Let's talk about the big question. How do you fix the American health care system? I know you've been studying it for a long time. You talked to Congress about it. What are your kind of broad, big ideas that need to be addressed? Sure. So thank you. An important topic and one I think about tirelessly. I've had the good fortune of working for the SIGMI Group for 35 years and I've been in pursuit of the question you just asked. There are three major things we could do to dramatically improve our health care system. One we talked about, we don't talk about enough.

12:56Invest more resources and energy up front in someone's health and life journey around preventative care, whole person care, and long-term health. The most developed countries around the world, Congress asked a question about Switzerland. Switzerland, 12.2 % of their GDP on health care. 84 is the life expectancy. Italy, 8.4 % life expectancy in 84. Why have so many other first world countries figured out how to do this and we have not? We have a shortage of primary care physicians, OBGYNs, pediatricians, and geriatricians. That's one. Two, given we are$5 trillion of spending on health care, the money needs to be spent based upon clinical outcomes, not consumption.

13:44We are a volume-based model. The more volume that is delivered, the more dollars are spent. The more innovation exists around paying based on clinical outcomes, especially in some of the more complex healthcare situations. That's where Centers of Excellence exist. That's where chronic care optimization programs exist. That's where getting more alignment with pharmaceutical manufacturers on some of the higher-cost medications. And third is to harness competition more aggressively. The U.S. system works when we harness competition. 90 % of all pharmaceuticals are generic. It's only 12 % of the cost.

14:19Congress was grilling you recently. But how do you view the federal government's role in health care? What do you as an insurer need from Congress? So you used the word insurer. I kind of keep coming at this as health service because the vast majority of what we provide are services. From a congressional standpoint, the U.S. commercial market that you made reference to before functions and operates based upon choice. So ensuring that choice continues to exist because no employer is the same, no community is the same. Each marketplace has different levels of clinical sophistication. ensuring choice one, aggressively pursuing more transparency for the benefit of all, even if it's disruptive to any business model, including my industries, hospital, pharmaceutical, transparency is a clean elixir, is mission critical.

15:13And then thirdly, the federal government is the largest single payer of healthcare through Medicare, indirectly through Medicaid that it largely subsidizes, and then derivative programs around that. The federal government has the ability to ensure that more of those dollars are spent based on value, which will convert more of the health care delivery system to an outcome-based versus a consumption-based. Those three actions would be extremely positive. Just ahead, despite the challenges, David offers some hope for fixing the American health care system. You have two choices. You could either start every day with pessimism or optimism.

15:56I choose to start every day with optimism. That's next.

16:13Right now, there's this major debate, right, about whether to extend the enhanced benefits under the ACA, the Affordable Care Act, which supported millions of Americans before they expired in December, right? At the time we're speaking, it's still unclear what's going to happen with those subsidies. But what changes would you make to the market to make it work better for everyone? So the market that you're talking about is the exchange-based marketplace today. There are approximately 20 to 25 million Americans in the exchange marketplace, not unimportant just by way of scale and scope. When the Affordable Care Act was launched back in when it became operational in 2014, the subsidy dollars were largely pointed toward individuals above 100 % of federal poverty level.

17:00So where Medicaid dropped off, it picked up to about 250 % of federal poverty level. And the program ultimately gained very good traction there and had good continuity there. There were some subsidy dollars for people above 250 % of federal poverty level to 400, but then it stopped. And you had more choice and individual engagement there. During COVID, the subsidy dollars went meaningfully above the 400 % of federal poverty level. So we need to step back and decide who is the target audience for this program. If it's individuals up to 250 % of federal poverty level, there's an architecture that works quite well that we need to strengthen.

17:40If you want it to go to 400%, it needs to be strengthened. If you want it to go to 700%, having a debate around temporary subsidies is not helpful or effective. It boomerangs the market. It's not fair to the recipients or the patients that are boomeranging around. And the players in the space, both the hospital systems and doctors and the insurance companies can't operate with the rules changing every year. We're seeing the negative ramifications. And unfortunately, millions of Americans are caught in that friction right now. And that's unacceptable. It's been a little bit more than a year since the killing of United Health executive.

18:18The CEO of United Health Care, Brian Thompson, was fatally shot just outside the Hilton Hotel in Midtown Manhattan. Police are searching for the gunman. They believe the shooting was a targeted killing. Let me show you the live picture. which really unleashed a wave of public animosity around this topic of health care. The alleged CEO killer, Luigi Mangioni, denied bail, as many people are sympathizing with him online tonight. I'm curious how Cigna changed the way it's operated since then. You're referencing December 4th of 2024, I think, to be exact. Very poignant. You remember that day specifically.

19:03You have to. You have to because that should never happen to any American, let alone someone in your peer in your industry. So core of your question, what do we do? First things first, you deal with the physical safety and psychological safety of your colleagues and their family members because time changed at that moment. No one should go through or endure that. violence of that level is not acceptable under any circumstances, period. So what do we do after leaning into the physical and psychological safety? We chose to listen even harder. We came forward with a public voluntary set of commitments known as our commitment to better.

19:46First, it committed to easing further access to care, including the prior authorization dialogue we had earlier. Second, expanding support resources. So additional clinical resources and administrative resources that are wrapped around individuals and their families if they're in elevated clinical challenging situations or administratively challenging situations. Third, more value, improving the out-of-pocket costs for consumers at the moments that matter, for example, at the pharmacy counter. Fourth, additional accountability. Recommended to our board and our board implemented an elevation of the weighting of customer and patient satisfaction in the bonus program for anybody in our company who's bonus eligible.

20:29And then fifth, we committed to transparency. We said we would issue annually a transparency report to report on how we are doing relative to those commitments in the ensuing year. So later in the first quarter this year, the first transparency report will come out relative to some of the actions. David, as we wind down this conversation, which I think really illustrates how complex and complicated dealing with the healthcare system is, lots of challenges. It sounds like you have some optimism, though, that things can get better. I guess I'd just like to ask, finally, what gives you hope that positive change is coming?

21:08So I appreciate the opportunity to end on this. We're about to, as the United States, celebrate our 250th birthday anniversary. Our company is a 230-year-old company. We're one of the oldest companies that has been in service almost as long as this country. And it has gone through, just like the country, many rebirths over time. So you look back to look forward. You have two choices. You could either start every day with pessimism or optimism. I choose to start every day with optimism. The road will lead you to realism. but if you're optimistic, you could bias it in a certain way of positivity.

21:49And then lastly, there are bright spots all over the place. Unfortunately, our society seeks not to talk about them. We seek to talk only about the flat spots, and we need to learn from the flat spots, but we need to learn from the bright spots as well. And the final note I would say is, I'm driven to help to make the U.S. healthcare system better for the next generation. David, thank you so much for joining us today. Thank you very much. We reached out to the U.S. Department of Health and Human Services, and they did not respond to our request for comment. And that's bold names for this week.

22:24Our producer is Alexis Green. Our video producer is Kasia Broussalyan. Our fact checker is Aparna Nathan. Jessica Fenton is our technical manager. Jessica and Michael LaValle are our sound designers. Jessica also wrote our theme music. Our supervising producer is Katie Ferguson. Additional help from Jana Heron. Our development producer is Aisha Al-Muslim. Chris Zinsley is the deputy editor. And Falana Patterson is the Wall Street Journal's head of news audio. For even more, check out my columns on WSJ.com. It's linked in the show notes. I'm Tim Higgins.