Molina Healthcare CEO Joe Zubretsky downplayed attempts by Republicans to gut or limit Medicaid in upcoming reconciliation bills or at the state level on a Feb. 6 fourth-quarter earnings call.
Washington has floated the idea of cutting Medicaid through work requirements, block grants, per capita caps and other options in order to fund a tax bill and cut spending through the Department of Government Efficiency.
“We continue to believe that any changes to the Medicaid program as we know it today will be marginal,” he said. “Neither side of the aisle wants to see more uninsured.”
Slashing Medicaid would require reducing benefits, trimming payments to providers and limiting enrollment. States would need to raise taxes or lower their education budgets.
“None of those solutions is politically tenable,” Zubretsky added.
Molina missed its earnings targets in the fourth quarter, largely due to Medicaid headwinds. The company posted earnings per diluted share at $4.44 and nearly $10 billion in revenue, down from analyst estimates of $5.81 EPS and $10.5 billion in revenue. Net income was $251 million.
Its full-year medical cost ratio is 90.3%, driven higher by high utilization and redeterminations. Wall Street noticed, and the stock was down 10% Feb. 6.
Over the full year, Molina recorded $20.42 EPS, $1.2 billion in net income and an 89.1% medical cost ratio.
To be sure, Molina won a Medicaid contract worth $2 billion in Georgia. The company also secured dual-eligible contracts in Idaho, Massachusetts, Michigan and Ohio worth $3 billion. Molina retained contracts in Florida, Michigan and Wisconsin, and it is protesting an award in Virginia.
In 2025, new contracts will cause the company to incur new implementation costs. Molina expects $42 billion in premium revenue and $24.50 earnings per diluted share after factoring in new contract costs.
Over the next three years, premium revenue is expected to jump from $42 billion to at least $52 billion in 2027.
Molina has 5 million Medicaid members and expects to gain 100,000 members this year. It also has Medicare and individual market customers.