For the first time ever, there’s no Molina atop the organizational chart at Molina Healthcare in a move that highlights the challenges payers face in this uncertain market environment.

On May 2, the California-based insurer removed CEO J. Mario Molina and CFO John Molina, who are brothers, from the jobs they held since 1996 and 2003, respectively. Their father, C. David Molina, founded the company in 1980 and began its path toward becoming a Medicaid powerhouse, managing Medicaid members in 12 states and Puerto Rico. The publicly traded insurer also participates in Medicare Advantage and sells individual commercial plans through exchanges in each of its states.

The ouster of the Molinas (who remain on the company’s board) was hard to picture a year ago, when the company had done well managing its exchange population and Medicaid expansion business under the Affordable Care Act, as explored in Decision Resources Group’s Health Plan Analysis and Managed Care Organization Analyzer insights. In fact, Molina overall enrollment surged from 1.7 million in July 2013 to 4.1 million three years later thanks to a post-ACA growth strategy, according to DRG enrollment data. Molina also seemed prime to grow in Medicare Advantage through divestitures Aetna planned to make if its merger with Humana moved ahead.

But fortunes change. When Aetna and Humana terminated their planned merger, Molina’s expected growth in Medicare Advantage vanished.

Its success with Obamacare’s newly insured also worked against Molina. The insurer took licks from managing its high-risk exchange patients well, illustrating Obamacare’s most glaring flaws. Instead of receiving reinsurance payments intended to help insurers with high-cost members, Molina ended up paying other insurers because the Department of Health and Human Services bases the funding on total premiums, not an insurer’s risk levels.

These quirks of the ACA brought down Molina’s earnings significantly, leading Mario Molina to publicly say the company could quit exchanges in 2018 if the federal government does not fix funding for cost-sharing reductions. Those payments are embroiled in the standoff over budgets and the Republican replacement proposal for Obamacare, so a resolution has not arrived.

New leadership leaves Molina’s exchange position in even greater uncertainty than before. In California, the insurer can submit two sets of rates for its commercial plans (one under current law, the other if the Republican replacement passes) but that might not be enough enticement for Molina to stay in the exchanges. The company had not dabbled in the commercial market prior to the launch of the state exchanges, and it could easily revert to its core business, Medicaid, which has been stunningly successful due to most Medicaid expansion states experiencing higher-than-expected enrollment.

This move to new leadership means Molina, which was primed to benefit from the planned mega-mergers, could quickly become an M&A target. Molina suddenly moves into the acquisition crosshairs. Aetna would be a possibility. If Cigna’s merger with Anthem dies, Cigna too could be a possibility, since it would receive a $5 billion break-up fee from Anthem.

Even as one mega-merger failed and a second clings to life, merger talks among the publicly traded insurers are suddenly alive again. And Molina, one company rarely linked to merger talks, could be at the center of them.

To hear more on the future of the exchanges and the evolving healthcare environment, attend our upcoming Webinar on June 27, entitled “The Politics of U.S. Healthcare - Exchanges in the Trump Era.” Registration available here (


For more on the exchanges and healthcare, follow Bill Melville @BillMelvilleDRG



About Health Plan Analysis

DRG’s Health Plan Analysis explores pharmacy benefit, provider contracting, and product trends through actionable industry insight and key enrollment data across the United States, including Commercial, Exchanges, Medicare, and Medicaid markets. Find out more: Health Plan Analysis.


About Managed Markets Surveyor

DRG’s Managed Market Surveyor delivers benefit enrollment data by managed care organization and at multiple geographic levels to better inform strategic planning and resource allocation. Find out more: MMS and MMS-Rx.


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