UnitedHealth Group and other diversified payers have struggled with some aspects of the Affordable Care Act, but Medicaid-centric payers, such as Molina Healthcare, have proven to be clear-cut winners under healthcare reform.
Molina's profit more than doubled in the past year, totaling $143 million in 2015. The windfall comes one year after Molina boosted its year-end profit by 18%. The ACA's expansion of Medicaid eligibility to more low-income people has certainly played a leading role.
Molina had 557,000 low-income members who gained coverage through the ACA's Medicaid expansion at the end of 2015. That represents almost 16% of Molina's 3.5 million membership base, and it's a population that Molina did not have two years ago. Molina operates in six states that have expanded Medicaid to people who make up to 138% of the federal poverty level.
The rush of new Medicaid membership—as well as renewals of state Medicaid contracts, the launch of dual-eligible health plans and several acquisitions—pushed Molina's 2015 revenue past the $14 billion mark. That means Molina ended the year with a razor-thin 1% profit margin, but that was still higher than the 0.6% margin from 2014. Molina has set a goal of reaching a net profit margin between 1.5% and 2% by the end of 2017.
Molina also has pursued the ACA's exchange market because many enrollees oscillate between exchange coverage and Medicaid due to their low incomes. Dr. Mario Molina, the insurer's CEO, previously told Modern Healthcare that he wanted Medicaid and exchange enrollees to have continuity with their doctors. The insurer ended 2015 with 205,000 ACA exchange members, down from 226,000 in the third quarter but a huge uptick from 15,000 in the prior year.
Molina's fourth-quarter profit could have been even higher if it weren't for an unexpected $15 million “contract settlement charge.” Molina ended its management contract with College Health Enterprises, Molina spokeswoman Sunny Yu said, which resulted in the $15 million early-termination penalty. Molina managed the acute-care services at one of CHE's facilities, College Medical Center in Long Beach, Calif.