Molina Healthcare is quietly becoming a big winner under Obamacare. The Medicaid managed-care insurer said its third-quarter profit doubled and revenue soared 47% as more low-income consumers gained health coverage.
The Patient Protection and Affordable Care Act gives states the option to expand the eligibility of their Medicaid program to people who make up to 138% of the federal poverty level. Six of the 11 states in which Molina offers Medicaid plans—California, Illinois, Michigan, New Mexico, Ohio and Washington—expanded Medicaid this year.
So far, Molina has added 314,500 members through the ACA's Medicaid expansion, including 82,200 in the last quarter alone. Overall, Molina bumped its membership to more than 2.4 million people.
“Not only does our current Medicaid expansion enrollment significantly exceed the enrollment guidance we provided, but the number of expansion members we have added so far this year exceeds the total membership we added in 2012 and 2013 combined,” Chief Financial Officer John Molina said on a call with investors Thursday.
Net income in the recent quarter totaled $16.1 million, up from $7.6 million in the same period a year go. The Long Beach, Calif.-based insurer's revenue jumped to $2.48 billion from $1.69 billion. The $0.33 earnings per share more than doubled the level from 2013.
However, Molina executives said their full-year financials will likely fall short of the low-end of predictions. As a large Medicaid insurer, Molina deals with a generally sicker population that may need more expensive care. Its medical-cost ratio was 90.6% in the third quarter ended Sept. 30, meaning that, for every dollar in premiums it collected, it had to pay almost $0.91 in medical benefits. That was higher than the 87.3% medical-cost ratio Molina posted in the same period last year.
Molina also is struggling to recoup costs from the ACA's health insurer fee. Under the health insurer fee, the government levies a tax on payers to help fund portions of the law. But for Medicaid managed-care payers, states are helping to cover that tax. Molina said it is still waiting on California, New Mexico and Texas to fully reimburse the fee; Michigan and Utah also owe portions of the fee.
Barclays healthcare analyst Joshua Raskin said in a research note that Molina's report “follows a pattern of volatility” and that there will be “growing pains” as Molina expands.
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