Molina Healthcare’s profit surges, fueled by Medicaid, exchange plans
By Bob Herman | May 7, 2015
Molina Healthcare recorded booming revenue and net income figures in the first quarter, a direct result of the Affordable Care Act’s expansion of Medicaid and private health coverage.
“We believe that government-sponsored initiatives, including the Affordable Care Act, will continue to provide us with significant opportunities for membership growth in our existing markets and in new programs in the future,” Molina said Thursday in a filing with the Securities and Exchange Commission.
Molina, a managed-care insurer based in Long Beach, Calif., almost exclusively focuses on Medicaid. It sells health plans in 11 states. Six of those states—California, Illinois, Michigan, New Mexico, Ohio and Washington—have expanded Medicaid under the ACA to low-income people making below 138% of the federal poverty line.
The number of people who gained Molina Medicaid coverage as a result of the ACA increased more than three times year over year, from 133,000 to 437,000, as of March 31.
The insurer also offers exchange plans in nine states. Molina had only 8,000 ACA exchange enrollees in the first quarter last year, and that figure soared to 266,000 after the most recent open-enrollment period. About 70% of Molina’s exchange members are in Florida.
The exchanges will never be the company’s primary business line, Molina Healthcare CEO Dr. J. Mario Molina told Modern Healthcare at the J.P. Morgan Healthcare Conference in San Francisco in January. But the company didn’t want to miss out on the exchanges either.
“People go on and off Medicaid. We thought if we were in the exchange, it would be a way for people who lost their Medicaid eligibility to stay with their health plan and their doctor,” Molina said. “The second reason is more strategic. If at some time states do away with Medicaid and give people vouchers to purchase coverage through an exchange, we wanted to be participants in that.”
Molina’s $28.2 million profit in the opening quarter of 2015 was six times higher than the profit from the prior-year period. Total quarterly revenue jumped 53% to $3.17 billion. That equals a still-slim 0.9% profit margin, but it was still much higher than 0.2% last year.
Overall membership increased 38% to 2.97 million. Molina’s medical-loss ratio for those members—the amount of premium dollars spent toward healthcare services and procedures—stayed flat year-over-year at 88.7%.
Bob Herman covers the health insurance industry and other healthcare news. Before joining Modern Healthcare in 2014, he covered hospital finance as a reporter and editor at Becker’s Hospital Review. He has a bachelor’s degree from Butler University in Indianapolis