Meet the insurer making money from ObamaCare

Meet the insurer making money from ObamaCare
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A California-based insurer that once sold mostly Medicaid plans has become a top competitor in ObamaCare’s marketplaces.

In likely the toughest year yet for the reform law, Molina Healthcare is thriving in a market that’s seen high-profile departures from some of the nation’s largest health insurers.

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Dr. Mario Molina, the company’s CEO, attributes much of the company’s success to its long history of selling Medicaid plans, which forced it to rein in costs.

“In the Medicaid environment, we don’t have ability to raise prices or raise premiums. We have to learn to live within a budget, and that’s very different than on the commercial side,” Molina said in an interview with The Hill last week.

Molina Healthcare has expanded its footprint within -ObamaCare by offering customers plans that cut costs by limiting options for care. Its larger competitors, such as UnitedHealth Group, are used to selling plans ready-made for the pricier employer market.

Molina’s plans are now among the most affordable on the market. But unlike other companies that tried to attract customers in the first year of ObamaCare with ultra-cheap plans, Molina is staying profitable.

In the first year of -ObamaCare, Molina set and then later achieved an ambitious goal of doubling the company’s revenue to $12 billion within two years. Now, the 4 million-member company is expecting to pull in $16 billion by the end of the year.

“The thing that surprised us is that we actually exceeded our growth expectations,” Molina said.

Those gains are coming as giants like UnitedHealth and Aetna have retreated, complaining of unsustainable financial losses.

The big insurers’ troubles have led critics to raise questions about the overall sustainability of the ObamaCare model.

But Molina sees more room for his company to grow. It has already announced plans to expand this year into three more markets.

Two of those, Florida and California, are in states that UnitedHealth and Aetna just left.

The key to its expansion, Molina said, has been in offering the types of low-cost plans that he said people with lower incomes actually want.

Instead of allowing patients to see nearly any doctor they want, Molina’s plans have rules about where a patient can go — for a much cheaper monthly premium.

“We don’t offer everybody, but we offer a lot,” Molina said.

Health insurance experts describe those types of plans as “narrow networks,” a label that Molina said carries an unnecessary stigma, particularly among policymakers.

“I think this issue about narrow networks versus broad networks has really been overblown,” he said. Molina cited his experience working in clinics where people pay in cash.

“I think there’s a huge disconnect between [the] many people [that] are involved in making policy and the patients that we serve,” he said.

He stressed that under ObamaCare, every health plan has to cover the same types of services. The big difference between Molina and other commercial insurers is the person or place that provides those services, but Molina said those rarely vary in quality.

He offered an example: his father, who underwent chemotherapy several years ago.

Instead of going to a world-renowned hospital like the one at the University of Southern California, Molina said his dad — a former emergency room physician — preferred to go to a local hospital called St. Mary Medical Center. There, his father received “the same chemotherapy he would have gotten at USC” and was closer to his family at home.

“While it sounds nice to say that we have these super duper specialty hospitals, most people just want to go to their local hospital,” he said.

Unlike companies like UnitedHeatlth, Molina has always only offered the narrower plans, called HMOs, or health maintenance organizations, as opposed to plans with wider options like PPOs, or preferred provider organizations.

With the current state of -ObamaCare’s marketplaces, healthcare experts have noticed that more companies are choosing to offer narrow plans.

For example, Blue Cross Blue Shield has pulled some of its PPO options off the market in Texas and Minnesota this year, but it is still offering HMOs.

“I do expect that, going into future years, we will see more of this model,” said Cynthia Cox, who studies healthcare reform and private insurance for the Kaiser Family Foundation.  

Kevin Lucia, who has closely tracked private health insurers in ObamaCare with Georgetown University’s Center on Health Insurance Reforms, said Molina’s financial picture has clearly stood out among other companies.

But he cautioned that it’s too early to know whether the company’s model can maintain its offerings in the long term and whether there’s any impact on quality.

“We’re at the early stages of understanding these plans,” Lucia said.

“One thing’s for sure: They seem to be having a different experience than UnitedHealth.”