February 28, 2017


This CEO's Small Insurance Firm Mostly Turned A Profit Under Obamacare. Here's How (APRIL DEMBOSKY, 2/28/17, KQED Public Media)

[T]he administrators of a smaller, California-based insurer -- Molina Healthcare -- managed to turn a modest profit in the early years of the health law. How did they do it?

"We understood the demographics of the people that we're serving a little better," says Dr. J. Mario Molina, CEO of Molina Healthcare, "because we've been doing it for so long." [...]

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 says -- most people who signed up for Obamacare plans are low-income.

"It's a different population most insurance companies haven't been interested in," he says.

For example, transportation is an issue for his company's customers. They often take the bus to medical appointments, he says, so would rather see a doctor close to home, than at an academic hospital 30 miles away.

"We don't contract with every hospital and every doctor," he admits. "It's not everyone, but it's enough so that you can find a doctor and the hospital and the services you need." His company now operates in 12 states and Puerto Rico. [...]

Some larger insurers are accustomed to creating health plans for big companies, who often want more doctors and more benefits included, in hopes of attracting and retaining top employees. But plans like that cost more.

"They're looking at things sort of from the top down, and we're looking at things from the bottom up," Molina says.

He's used to running a low-cost, low-margin business, while big guys like Humana, Aetna and UnitedHealth aren't. Industry analysts say that's why some of the big players lost money with Obamacare.

"It's easier to work up from a low-cost position than it is to work down from a higher-cost position," says Josh Weisbrod, a health care consultant with Bain & Company. "For an insurer that is used to selling employer plans with rich benefit designs and broad networks, it is difficult for them to transition that to a narrow network of lower cost providers."

The bigger insurers will have to learn to run their business better as we get rid of wasteful employer plans.
Posted by at February 28, 2017 7:08 AM