- Molina Healthcare lost half a million Medicaid members due to redeterminations by the end of 2023, executives said Thursday.
- States resumed checking beneficiaries’ eligibility for the safety-net program in April following a pause during the COVID-19 public health emergency. Some 16 million Americans have been disenrolled from Medicaid to date because of the redeterminations. The process is disproportionately impacting insurers with a heavy Medicaid presence like Molina, which brings in 80% of its revenue from the program.
- Molina still expects to retain 40% of its Medicaid membership once redeterminations are complete. However, on Thursday the insurer raised its estimate of members gained during COVID from 800,000 to 1 million because of new business adds. That implies a net member loss of 600,000 once redeterminations are complete.
Molina has steadily increased the number of members it expects to lose from redeterminations.
Originally, the payer had expected to lose 400,000 of the 800,000 members it gained during the pandemic, but it increased that number to 480,000 in the third quarter.
Now, executives are predicting an even higher membership loss once states wrap up the eligibility checks. That’s because Molina actually gained more members during the pandemic than it had previously thought due to new business additions in 2023 and 2024, CFO Mark Keim said on a Thursday morning call with investors to discuss the insurer’s fourth-quarter financial results.
Molina has also submitted responses to requests for proposals for contract renewals in Florida, Virginia and Michigan, according to CEO Joe Zubretsky. And Molina has submitted bids in several new states, including Kansas and Georgia, for contracts in the next few years, Zubretsky said on the call.
“We remain confident in our ability to continue to win new state contracts,” Zubretsky said.
However, Molina doesn’t have a perfect track record in retaining Medicaid contracts. In October, Molina lost a contract in Indiana — one that the payer had expected to renew — after failing to stand up products in time.
Despite redeterminations’ volatility, Molina’s guidance of $38 billion in premium revenue in 2024 remains unchanged. That’s because states are continuing to revise rates to reflect shifting acuity as members are disenrolled, Zubretsky said.
Molina reported a medical loss ratio of 88.1% for 2023, consistent with analysts’ expectations. Other major health insurers have seen their MLRs, a marker of spending on patient care, skyrocket as 2023 came to a close, mostly due to seniors in Medicare Advantage products utilizing more medical services than expected.
Molina has a small MA footprint, consisting of just 172,000 members. Like its peers, the insurer did see heightened medical costs in the fourth quarter from seniors using more in-home services, high-cost drugs and supplemental benefits like dental and vision care, executives said.
Larger MA organizations like Humana have already begun lobbying against proposed rates for 2025 that they say don’t account for growing medical costs. The rates, if finalized as proposed, would represent a decrease in plans’ benchmarks.
Zubretsky said that’s not the case for Molina. Though the CEO agreed that the rates are inadequate, Molina projects its benchmark rate for 2025 will actually increase 0.5% under the proposed changes.
Overall, the insurer served 5 million members at the end of 2023, down about 250,000 members, mostly due to Medicaid losses.
Molina beat Wall Street expectations for earnings and revenue in the fourth quarter, with a topline of $9.1 billion, up 10% year over year. The payer’s net income of $216 million was almost four times larger than its profit at the same time last year.