I cover Molina Healthcare (MOH) in my latest post. Hope you find it helpful!

Stepping back, Medicaid traditionally covered – and still does cover – children, the elderly, the disabled, pregnant women and poor families with minor children. In traditional Medicaid, rates are set by the state during a standardized RFP process, the population is well defined in an actuarial sense, and members pay nothing. Contracts can last for several years, with annual renewal and repricing.

In the Obamacare Marketplace business, insurers compete on price for the uninsured writ large – anyone without Medicare, Medicaid or employer coverage. Enhanced federal subsidies, begun in 2021 and set to expire at the end of this year, have made plans through Obamacare Marketplace free or nearly free for about 45% of participants. Beginning 2022, monthly free enrollment became available to low-income populations.

This broke the insurance model, as the sickest patients are attracted to free plans, and patients will enroll when they are sick if given the monthly option to do so. Over 2022-2025, the total pool of Marketplace insured got sicker and sicker, overtaking the healthy patients that make the insurance model work

It took about three years for the Marketplace bomb to go off.