Could Cigna Exiting the Individual Market be an Indictment of ICHRA?

This month, Cigna announced during its first quarter earnings call that it is exiting its individual exchange business or the Obamacare exchanges at the end of the year, affecting 369,000 Americans in 11 states. With this exit, combined with the sale of its Medicare Advantage business in 2025, it appears Cigna is shifting its focus entirely to employer-sponsored insurance and pharmacy services.

In exiting that business, one healthcare expert believes Cigna is doing something that is contrary to its core insurance strength: mid-market employers (50-250 employees) and alternative funding arrangements. In other words, groups that seem to be prime targets for Individual Coverage Health Reimbursement Arrangements (ICHRAs), said Ari Gottlieb, principal of consulting group A2 Strategy Corp. 

ICHRAs — which some have called the future of individual insurance — allow employers to provide their employees with tax-free money so they can purchase their own individual health insurance plans. Advocates say ICHRAs offer more flexibility and allow employees to choose the plan that best suits their needs. They’re typically offered off-exchange, meaning individuals shop for plans directly through the insurer versus healthcare.gov or a state-based exchange. However, adoption of ICHRAs, while growing, is still relatively small. About 400,000 to 800,000 U.S. residents have ICHRAs, according to data from HealthSherpa.

So could Cigna’s exit from the individual market be an indictment of ICHRA? Cigna confirmed to MedCity News that it is exiting the individual market both on and off-exchange, meaning ICHRA is off the table for Cigna. 

“Cigna has never hyped ICHRA at all,” Gottlieb said. “But I think what we’re seeing today, exiting the individual market, sort of means they’re saying they don’t see that much potential there.”

He added that unless large insurers like UnitedHealthcare start talking about ICHRA, Gottlieb doesn’t foresee ICHRA being a meaningful business opportunity.

Gottlieb spoke before Cigna confirmed that it is getting out of individual insurance off-exchange.

Why Cigna is exiting the ACA Marketplace

On the insurer’s April 30 earnings call to discuss first quarter results, Cigna President and COO Brian Evanko said there were two main reasons the company chose to step away from the individual exchanges.

“One, we did not see a clear path to scale this business to achieve meaningful impact within the context of The Cigna Group’s aggregate size,” he said. “And the second factor is management focus for the organization. This is a small business for us today, and it’s been shrinking in recent years.”

This shrinking in enrollment can be partially attributed to the enhanced subsidies expiring, leading to sharp increases in premiums, according to Gottlieb.

Evanko added that the move will allow the company to “intensify focus” on its core growth platforms, such as its specialty and care services, its pharmacy benefit services and its employer business.

Cigna isn’t the only company exiting the ACA market, noted Michael Abrams, managing partner of Numerof & Associates. Aetna left at the end of 2025 and Baylor Scott & White Health Plan announced that it is leaving at the end of 2026. UnitedHealthcare is also scaling back, as are some regional players.

“Interest in the ACA marketplace peaked in 2025 at 24.3 million enrollees,” Abrams said. “The end of IRA premium subsidies in 2025, along with higher-than-expected utilization resulted in a spike in premiums that impacted enrollment.”

Gottlieb added that Cigna’s recent exits — both Medicare Advantage and ACA — indicate that it is seeking to get out of the direct-to-consumer business. ACA was a small and volatile business for Cigna with no clear path to meaningful scale. Therefore, it’s instead focusing on employer-sponsored insurance and pharmacy benefits.

Another healthcare expert predicted that more insurers could leave the ACA marketplace in the future, particularly given ongoing uncertainty about subsidy structures, utilization trends and long-term margin sustainability.

“Insurers are becoming much more disciplined about where they believe they can achieve sustainable growth and profitability,” said Tyler Giesting, partner of healthcare M&A at West Monroe. “More broadly, health plans across the industry are increasingly focused on simplifying portfolios, prioritizing core businesses, and concentrating investments in markets where they have greater scale and competitive advantage.”

Hal Andrews, CEO of healthcare analytics company Trilliant Health, said Cigna’s decision to exit the ACA marketplace was unsurprising.

“Whether Cigna was the first to recognize the insurance death spiral, they were the first to do something about it,” he said. “It will be interesting to see whether Cigna eventually exits the fully insured market to focus exclusively on ASO services and Evernorth.”

A rebuke of ICHRA?

For Gottlieb, Cigna’s recent exit announcement could signal that ICHRA is not the game-changer some proponents claim it to be.

“It seems to be an acknowledgement on the part of Cigna that at least in the near term, ICHRA is not going to take off. Because you would think they would want to be there if it was,” he said. “To me, that may be the most surprising thing. They’re sort of saying, we’re not going to be in individual, which means also ICHRA is off the table.”

Abrams seems to agree that ICHRA may not be of interest for traditional insurers.

“ICHRA offers some innovative options for employers, but how it becomes a relevant revenue stream for traditional insurers is a separate issue,” he said. “Each insurer needs to determine where to invest to drive growth. It’s likely to appeal to employers who don’t want to continue subsidizing insurance, representing a paradigm shift for the industry. But ICHRA is still in its early days, and it may be a while before it really takes off, which suggests it’s not a short-term path to the revenues insurers need.”

Photo: kroach, Getty Images