Lisa Gill: Great. Thank you.
Operator: Thank you, Ms. Gill. Our next question comes from Kevin Fischbeck with Bank of America. You may ask your question.
Kevin Fischbeck: Great. Thanks. I wanted to get a little more color on the increased enrollment outlook. I guess you’ve indicated in the past that you’re being a little bit concerned about recessions and determinations. Were those — anything changed there to drive that? Or was it new customer growth? Just a little color. Thanks.
Brian Evanko: Good morning, Kevin. It’s Brian. So, I’ll start, and I think your question is specific to Cigna Healthcare, which is where I’ll go. So, first off, we’re really pleased with the strong growth momentum across the Cigna Healthcare book. If you look at our year-to-date customer growth, it’s running ahead of expectations at $1.5 million net growth, and that builds off of a strong performance we had in 2022, where we added nearly 1 million customers across the Cigna Healthcare platform. As it relates to our refreshed membership outlook for the year, you can think of the primary driver of that being an elevated expectation for individual exchange customers by year-end 2023. The other components of the Cigna Healthcare customer outlook are broadly unchanged from our prior projections.
We’re not yet seeing meaningful signs of any economic pressure within our commercial book of business. But that said, we have assumed some elevated disenrollment in the U.S. commercial business in the second half of 2023 in order to be prudent. We continue to exclude any potential Medicaid redetermination lives from our commercial forecast for the balance of the year. And taken all together, again, pleased to see a full year outlook of 8% growth in total medical customers across Cigna Healthcare. One minor refinement we made this year or this quarter relative to the individual exchange business is, we are now forecasting some level of Medicaid redeterminations coming in through the balance of the year. So, you should think of the commercial business, excluding Medicaid redetermination, the individual forecast now including some level of redeterminations for the balance of the year.
Kevin Fischbeck: Great. Thanks.
Operator: Thank you, Mr. Fischbeck. Our next question comes from Josh Raskin with Nephron Research. You may ask your question.
Josh Raskin: Hi, thanks. Just clarification on the exchange true-ups and the impact there. I just want to make sure I get this right. I assume you’ve got a bigger payable, but that probably means that your claims costs are coming in a little bit better. So I just want to see if there’s actually — and offset from the receivable from last year. So I just want to see if there’s actually an EPS impact expected for this year. And then my real question is, just could you speak to your MA bid strategy for 2024? I’m specifically interested in how you’re thinking about benefit design in light of rates and the risk model changes? And then, if there’s anything to talk about the VillageMD partnership, if that impacts any way you’re bidding in certain markets?
Brian Evanko: Good morning, Josh. It’s Brian. So, I’ll take the first one, and then David will pick up on the Medicare Advantage question. So, as it relates to the different payable dynamics, let me try to give you the full picture here. So, just for some context, we ended the quarter with about 820,000 customers in the individual exchange business. That was up significantly from where we were at the end of 2022. And during the 2022 year, we were in a risk adjustment receivable position on this business. So, when we stepped into ’23, we had been anticipating that, that would switch over and that will — we’d be in a payable position for 2023. The first look we got at the industry-wide risk adjustment data that we received in early July indicated that we’ll be in an even greater payable position for the 2023 plan year, and that was driven by two large states.
Those two large states represent about half of the individual exchange premium base. And the adjustment in the first half of the year that came through the second quarter was an $80 million increase in the payable. That was offset largely by a favorable true-up on the 2022 receivable. You can think of that in the range of about $50 million. And then the residual is primarily driven by favorable claim costs in 2023 relative to our expectations. So that favorability in the 2023 claim costs partially offset the increased payable that we have — that ran through the second quarter. So hopefully, that helps to square the picture a little bit on the individual exchange business. David, do you want to pick up on MA?
David Cordani: Sure, Brian, thanks. Good morning, Josh. So, you had two questions. Specific to MA and our bid strategy, I’ll just speak more broadly. I’m not going to go into detail specifically, Josh, just to manage expectations given the time cycle and the competitive nature. First and foremost, as I noted, we’re pleased with our growth in 2023, point one. Two, as we look to 2024 to some of the points you made reference to, we expect to see larger-than-average local market variability in terms of offering and positioning by competitors. And at this point, I would highlight and reinforce that we remain convicted to and comfortable with our bid assumptions relative to underlying medical costs based upon what we’ve seen through the first two quarters of the year and our outlook for the year.
I’d also note that our [stars] (ph) position coming into the cycle is consistent and strong and our early look at the stars on a go-forward basis remains consistent and strong from that standpoint. Specifically to your last point around Village, first and foremost, I’d ask you to think about initiating the relationship with Village, we seek to have a long-term strategic positive impact. I would note that day one for the benefit of our customers who are experiencing Village and Summit relationships, they began to see benefits immediately by the nature of the structure of our relationship. And then, we continue to collaborate, innovate on value-based care, whether it’s leveraging some Evernorth capabilities like behavioral, virtual or other services, and/or go more deeply into individual markets around more precisely leveraging data and insights to curate sub-specialty networks to get the best possible quality and cost and affordability.
That benefit will continue to mount as we go forward, and to the core of your question, contribute to market by market, our posture in MA. But specifically, we’re driving this initiative with Village and with our Evernorth team to benefit our commercial space as well. So, we’re pleased with the early traction, a lot of work to do, and it will continue to yield dividends both today and into the future. Thanks, Josh.
