Molina Healthcare, one of the stalwart insurers in Obamacare, said it may pull out of the healthcare program next year after it saw its fourth-quarter profit tumble, due to massive losses from its participation in the law.
"We believe there are too many unknowns to commit to participation beyond 2017," Molina CEO J. Mario Molina said in a call with reporters Wednesday afternoon. "We will wait and see how the new administration and Congress plans to adjust the program."
Molina reported that in the fourth quarter of 2016 its income before taxes fell to $137 million, from $322 million a year earlier. The profit was driven down by $110 million in losses from Obamacare, performance that the company characterized as "substantially lower" than the $60 million in profit it was expecting to generate from the program.
Though Molina is not a major insurer by overall marketshare, it has bet a large proportion of its business on the success of Obamacare and has been an enthusiastic booster of the program.
The company said it had expected to receive $90 million in payments from the federal government from a program meant to compensate insurers with larger-than-expected losses. But Republicans limited how much in payments the Obama administration could make to insurers.
Molina said he was "clearly disappointed in these results. However, we have identified and are committed to taking decisive steps to stabilize marketplace performance."
Molina's results come as the law is suffering uncertainty from smaller-than-expected enrollment from young and healthy individuals and lack of a clear plan from Republicans and the Trump administration over how to repeal and replace it.
Earlier Wednesday, Aetna CEO Mark Bertolini said Obamacare is in a "death spiral" due to mounting losses. On Tuesday, Obamacare insurer Humana pulled out of the markets entirely for 2018.
Molina said the reasons for the losses were different than other insurers that have had to pay higher medical claims due to a sicker-than-expected population.
Molina paid $525 million under the law's risk adjustment program, which was $325 million more than Molina had projected.
Risk adjustment is one of several programs created by Obamacare to entice insurers to participate in the marketplaces. It takes money from plans with lower-risk enrollees to plans with higher-risk enrollees.
Molina criticized the program, saying that its key weakness is redistributing money based on premiums and that it penalizes "low-cost insurers like Molina."
The company sued the federal government last year to get back money from the risk corridor program, another program aimed to shore up insurer losses in the new marketplace. The risk corridor program, which expired in 2016, required insurers with profits to fund plans with losses.
Molina is among more than 10 insurers suing the federal government because of a shortfall in the risk corridor program.
For the 2014 coverage year, insurers requested nearly $3 billion in payments. However, not enough insurers paid in to the program and therefore they only got roughly $300 million.
The money from the 2015 risk corridor payments went to pay off the 2014 shortfall.
So far one insurer, Moda, has won its court case in the risk corridor lawsuit.