Some large health insurance companies have suffered losses under the Affordable Care Act, leading to a few high-profile exits from the online marketplaces. Humana is just the latest, announcing in January that it will stop offering health insurance on the ACA health exchanges at year’s end.
But the administrators of a smaller, California-based insurer — Molina Healthcare — managed to turn a modest profit in the early years of the 2010 health law and break even in 2016. How did they do it?
“We understood the demographics of the people that we’re serving a little better,” said Dr. J. Mario Molina, CEO of Molina Healthcare, “because we’ve been doing it for so long.”
Despite a disappointing fourth quarter of 2016, Molina remains a fan of the Affordable Care Act overall and hopes Congress will consult with him and other insurers as it debates the health law’s fate.
“It doesn’t need to be scrapped and replaced,” he said. “It needs a tuneup.”
Molina’s business grew out of a network of Southern California medical clinics serving mostly low-income patients that was founded in 1980 by his father, David, also a doctor. Sometimes when his dad’s patients couldn’t pay, they would trade services, or give him items from their homes instead of cash, the younger Molina recalled: a glass decanter, a pipe organ, even a dog.
“My father was old-fashioned,” said the CEO. “He believed doctors had an obligation to take care of patients and that the primary issue was not how they were going to get paid.”
In 1994, David Molina started his health insurance company, focusing on getting care to patients on Medicaid — government health insurance for the poor and disabled.
That is what positioned Molina Healthcare to move into the Obamacare marketplaces so smoothly, Mario Molina said — most people who signed up for Obamacare plans represent low-income households.