SALT LAKE CITY — Molina Healthcare announced Wednesday that it will no longer offer insurance plans to Utahns on the Affordable Care Act federal exchange beginning next year, citing financial losses and uncertainty over critical government funding.
The move means about 70,500 Utahns "will have to go shopping" for different health insurance for 2018, said Utah Department Insurance spokesman Steve Gooch.
The company also announced it is pulling out of the market in Wisconsin for the same reasons it is leaving Utah, and will lay off about 1,500 employees by the end of 2017.
“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 CEO of Molina Healthcare, said in a prepared statement.
There has been no indication from either SelectHealth or University of Utah Health Plans that they will withdraw from the exchange in any counties in 2018, according to the Utah Health Policy Project, a health insurance enrollment hub and think tank. Currently, SelectHealth offers plans on the exchange in every county, while University of Utah Health Plans serves 16 of the state's 29 counties.
Both of those organizations must submit their final plans for 2018 offerings to the Utah Insurance Department by Oct. 16, at which point they would be required to stay in the market, according to Gooch.
Jason Stevenson, spokesman for the Utah Health Policy Project, said that despite Wednesday's announcement, 95 percent of Utahns are expected to have a choice between two insurers in 2018.
Six insurers offered plans on the federal exchange in Utah when it launched in 2014. As recently as last year, four insurers continued to offer plans. Arches Health Plan stopped covering its 45,000 enrollees in 2016, while 9,000 Utahns were no longer able to use their Humana health insurance plans at the beginning of this year, with both insurers citing lack of financial feasibility in the state.
Gooch said he anticipates Molina "will still have a limited number of plans off the exchange," though he explained that under the Affordable Care Act, consumers who buy off-exchange plans are not eligible for tax subsidies.
For 2017, Molina sold on-exchange health insurance plans in Salt Lake, Utah, Davis, Weber, Summit, Tooele and Box Elder counties.
The company, based in Long Beach, California, also expects the performance of its remaining ACA marketplaces will fall substantially short of previous expectations in the second half of the year.
Steep losses have prompted some health insurers to back away from ACA public marketplaces. Others have been waiting for signs of stability before committing to staying on next year. Molina slid to a loss of $230 million in the second quarter of this year, compared to a net income of $33 million a year earlier.
Molina indicated Wednesday that it is reviewing its participation in other state health exchanges, noting that the performance of its marketplaces in Florida and Washington have been among the most disappointing. It also plans to increase 2018 premiums for its remaining ACA marketplace plans by 55 percent.
Molina spokeswoman Danielle Smith said in an email to the Deseret News that the company "will work diligently to do everything we can to make this a smooth transition."
"After months of deliberation and planning, this was a business decision that had to be made due to a number of significant factors including challenges in keeping premiums affordable, uncertainty around cost-sharing payments and the volatility around the individual market over which we have no control," Smith said. "In the meantime, we plan to continue serving our current exchange members in all of our existing Utah counties through the end of this year."
The cost-sharing payments Smith referenced, also known as cost-sharing reduction payments, are designed to help make insurers whole due to deductible and benefit savings the companies pass on to some consumers who use the federal exchange. Last year, the federal government provided $7 billion in such funding to insurers.
In June, the Utah Insurance Department decried what it saw as a lack of commitment to continuing those payments from President Donald Trump's administration, saying they told insurers to prepare their premium rates for next year as though those funds would not be available.
Trump referred to those payments in April as "ransom money" to compel Democrats to cooperate on health reform, and also threatened in a tweet Saturday that such payments "could end every soon." The president has said on different occasions that he would prefer to "let Obamacare fail" and allow it to "implode" if extensive reform to the current health care law could not be passed by Congress.
Reform efforts appeared to die last week due to a lack of support among Republican senators. No Democrats in Congress supported any of the reform legislation.
In its reaction Wednesday to Molina's announcement, the Utah Health Policy Project also alluded to the uncertainty surrounding federal funding.
“Molina’s unexpected decision to leave the Utah marketplace is disappointing to Utah consumers who deserve more choices and competition. But it is also a reflection of the political uncertainly that has plagued health insurance industry in recent months,” Matt Slonaker, executive director of the Utah Health Policy Project, said.
Contributing: The Associated Press