The future of Moda Health is up in the air after two states clamped down on the floundering health insurer.
Alaska and Oregon have mandated that Portland, Ore.-based Moda stop selling health plans in their states, where Moda has had a big presence in the employer and individual markets. This month, insurance ratings agency A.M. Best also downgraded Moda's credit rating to “under regulatory supervision,” a designation reserved for companies that are “impaired” and could be nearing insolvency.
Oregon's insurance department placed Moda under supervision because of its “hazardous” financial condition. Similarly, Alaska insurance officials issued an order of impairment, which basically freezes Moda's business in the state. Consequently, Moda has exited the Affordable Care Act's insurance marketplaces.
Moda lost almost $31 million in the first nine months of 2015, and its capital reserve deteriorated to $53 million, according to Oregon's regulatory documents. Because Moda's losses were more than 50% of its reserves, officials believed policyholders faced risks to their coverage.
The ACA's exchanges have weighed heavily on Moda's bottom line and have affected other insurers. Many consumers flocked to the exchanges in the first two years with illnesses and healthcare needs that were far more severe than expected. The collected premiums, therefore, were not sufficient to cover all medical claims.
“Bringing tens of thousands of people into the ACA marketplace, many of them with acute healthcare needs, has been a difficult process to manage,” Moda CEO Robert Gootee said in a statement. “The cost of providing this level of care, with all its attendant uncertainties, has put an unprecedented financial strain upon our health plan.” The plan did not comment further about its future. —Bob Herman