One of Obamacare’s dedicated insurers announced a big loss for its fourth quarter earnings on Wednesday.
Molina Healthcare reported that its net income per share decreased to just $0.14 in 2016, compared with $2.58 in 2015, citing “declining profitability” of its Obamacare business.
“While we experienced strong enrollment growth across our business and have made progress on our cost cutting efforts, today’s results highlight the continuing challenges we face in the ACA Marketplace,” J. Mario Molina, CEO of Molina Healthcare, said in a statement. “We are clearly disappointed in these results; however, we have identified and are committed to taking decisive steps to stabilize Marketplace performance.”
Molina’s earnings decline comes just after one of the nation’s top insurers, Humana, decided to exit Obamacare exchanges entirely after this year.
Humana incurred a net loss of $401 million during its fourth quarter of 2016, blaming the financial hit on an Obamacare loss of $583 million.
Molina’s CEO said the company would “continue to advocate for measures that the federal government can take to level the Marketplace playing field for insurers, like Molina, that offer effective, affordable health care to those who need it most.”
Molina is one of several insurers suing the federal government for payments under Obamacare’s risk corridors program, which was intended to mitigate risk for insurers who choose to participate in Obamacare exchanges.
Filing its suit in January, the insurance company is seeking over $50 million from taxpayers under Obamacare. The program was supposed to mitigate losses by collecting funds from profitable Obamacare insurers and distributing them to companies with higher costs due to sick and expensive customers; when not enough insurers became profitable enough to fund the program, the federal government argued it was not required to take money out of its own coffers to cover the losses.
In all, insurers have requested $2.87 billion under the program; they’ve been paid only 12.5 percent of that.
Molina said Wednesday that it believes it’s owed approximately $90 million in risk corridor payments for 2016 and that the absence of the funding “exacerbated” its existing Obamacare problems.
Different federal courts have made opposing decisions on several risk corridor cases, indicating that the question will ultimately be decided in a federal appeals court.
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