Executives at Molina Healthcare say they are still happy with the business their company is getting from the Affordable Care Act public health insurance exchange system.
The Long Beach, California-based Medicaid issuer has focused on appealing to exchange users who earn less than 250 percent of the federal poverty level, who may be churning between the exchange system and Medicaid, and getting heavy premium subsidies and cost-sharing reduction subsidies when they do use exchange plans.
The overall level of health of those people is about what Molina had expected, and better than the level of health of the other government plan enrollees the company covers, according to Joseph White, the company’s chief accounting officer.
Compared with what the company was seeing before, “we’re not seeing a huge number of chronically ill members,” White said Wednesday during a conference call with securities analysts.
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Molina held the call to go over earnings for the second quarter.
The company is reporting $33 million in net income for the quarter on $4.4 billion in revenue, compared with $39 million in net income on $3.5 billion in revenue for the second quarter of 2015.
The company ended the quarter providing or administering medical coverage for 4.2 million people, up from 3.4 million people a year earlier.
Enrollment in Medicaid plans affected by the ACA Medicaid expansion program increased to 654,000, from 475,000.
Enrollment in ACA exchange plans increased to 597,000, from 261,000.
The company says it expects claim costs to rise as enrollees meet their deductibles and the special enrollment period brings in sicker enrollees
Molina has been getting cash from a temporary ACA reinsurance program, which helps an individual coverage issuer with catastrophic claim costs, but it’s been paying into the ACA risk-adjustment program, which is supposed to shift cash from issuers with low-risk enrollees to issuers with high-risk enrollees, because it has attracted relatively low-risk enrollees.
Molina took a $37 million charge in the second quarter to reflect the difference between its ACA risk program estimates and the preliminary actual numbers that the Centers for Medicare & Medicaid Services released June 30.
Dr. John Molina, the chief financial officer, said the company believes it’s now doing a better job of reserving for ACA risk program costs.
“We believe that we have adequately priced our marketplace products for 2017,” John Molina said.
Dr. Joseph Mario Molina, the company’s chairman, noted that the company has operations in Puerto Rico and has been vigilant about Zika prevention and education efforts there.
He also noted that Florida has reported two possible cases of Zika spreading from person to person in the mainland United States.
“This is not a Medicaid-specific risk, but a general public health threat,” Molina said. “The concern now is a lack of adequate funding to local government agencies to respond to Zika in a comprehensive manner.”
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