Molina Healthcare, an insurer once heralded as an Obamacare success story, said Wednesday that it planned to hike premiums by 55 percent and leave two states altogether, as its huge bet on the government exchanges ended up leading to massive losses.
The company lost $230 million overall during the second quarter and announced that it will not be selling plans in Utah and Wisconsin for 2018. Other states where it sells plans would be "under review," Molina said in a news release, noting that performance in Florida, Utah, Washington, and Wisconsin was "most disappointing."
For the states will it will continue selling coverage, Molina plans to request an increase in premium rates of 55 percent for next year. The pricetag assumes the payment of cost-sharing reduction subsidies from the Trump administration will be cut off, but if the funds are allocated Molina still plans to request an increase in premiums of 30 percent.
"We are disappointed with our bottom-line results for this quarter and have taken aggressive and urgent steps to substantially improve our financial performance going forward," Joseph White, chief financial officer and interim president and chief executive officer of Molina Healthcare, Inc., said in a statement.
The cost sharing payments, which are separate from premium subsidies available under the law, are mired in a legal and political battle and go to insurers so they can offer lower out-of-pocket costs to their customers under Obamacare. President Trump has proposed cutting them off so that senators work on a healthcare bill to repeal and replace portions of Obamacare, an effort that some senate leaders say they have abandoned for now.
Though Molina is a relatively small insurer, it drew headlines for enthusiastically embracing the law. The company's former chief executive, J. Mario Molina, was a major industry supporter of Obamacare and he has been a vocal critic of Republican efforts to repeal and replace the law. He and is brother, John Molina, who was chief financial officer, were fired from their positions in May after poor first-quarter financial results.
According to Molina's earnings report, removing the Molinas from their positions cost the company $43 million in restructuring and separation fees.