Smaller insurers with experience in Medicaid, such as Centene Corp. and Molina Healthcare, are outperforming the broader insurance industry on the federal health exchanges. Their success is putting a spotlight on their business model as the Obama administration and other insurers seek to stabilize the fledgling individual market.
If Medicaid-like plan features become the norm, consumers and medical providers would be substantially affected. Such plans are often popular in the exchanges for their low premiums, but consumers have criticized limits on their access to medical providers such as doctors. And physicians fault the plans for low reimbursement rates.
Still, the financial success of these plans stands out as health insurance marketplaces for individuals face mounting pressure. The nation’s largest insurer, UnitedHealth, dropped out of more than three-fourths of the state exchanges it participated in last year. Analysts estimate the overall industry suffered losses in the range of $5 billion last year.
Centene and Molina, meanwhile, not only profited in 2015 from their exchange business, they are considering expanding, executives outlined on recent earnings calls.
Replicating or at least matching the Medicaid plans’ profits will be paramount for both their competitors and the Obama administration, since insurer participation in the exchanges is a key
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