President, Chief Executive Officer & Director, Molina Healthcare
Molina Health CEO Says GOP Health Bill 'Poorly Drafted'
Mar.09 -- J. Mario Molina, Molina Healthcare chief executive officer, comments on the American Health Care Act. He speaks with Bloomberg's David Gura on "Bloomberg Markets."
About Joseph Zubretsky
In March 2017, Molina Healthcare CEO J. Mario Molina criticized the American Health Care Act, the Republican-backed bill to replace the Affordable Care Act. He described it as a "poorly drafted piece of legislation" that was "being rushed through Congress," and stated that the insurance industry was not consulted during its drafting. Molina predicted that 15 to 20 million Americans would lose coverage, particularly those who gained it through Medicaid expansion, and that premiums would increase significantly, with increases "as large or larger than what we saw last year." He argued that the bill would destabilize the individual market by removing the individual mandate and that provisions allowing the sale of insurance across state lines would "do a lot of damage to consumers." Molina also expressed concern about the shift of Medicaid from a federal program to the states, stating that it would force a choice between funding Medicaid and education, with a "huge ripple effect through the entire economy." He noted that the bill was opposed by doctors, hospitals, seniors, and governors from both parties, and he encouraged people to contact their representatives and governors to voice their concerns.
Transcript (16 segments)
I
Interviewer0:11
It's being rushed through Congress. The Affordable Care Act was debated for nine months before it came to a vote, and this thing is being pushed through without anyone having a chance to really consider what it means. I wonder if you were consulted, if you know of colleagues in the insurance industry were consulted. How many people were at the table when this thing was drafted?
J
Joseph Zubretsky0:30
Well, as far as I know, the insurance industry was not invited to participate in this, so we've had no input. And that's kind of extraordinary.
I
Interviewer0:38
Hearing that from you, I would have thought, again looking back at how the Affordable Care Act was drafted, there was criticism that the insurance industry might have been too involved. Here you're saying nobody consulted you or your colleagues?
J
Joseph Zubretsky0:47
No, we weren't consulted as far as I know.
I
Interviewer0:52
Do you think this legislation stands a chance of working? You've read it now, you've seen the changes that are proposed.
J
Joseph Zubretsky1:11
Through the marketplace, doctors don't like this bill, hospitals don't like this bill, seniors don't like this bill, Republicans, some Republican governors don't like this bill, and Democratic governors don't like this bill. So I'm not quite sure who benefits from this legislation.
I
Interviewer1:30
Bearing that in mind, and it does sound like there is substantial opposition against it, were it to get through, how would that change your business? What would that mean for Molina Healthcare?
J
Joseph Zubretsky1:38
Well, I think the first thing it's going to do is destabilize the individual insurance market. By removing the individual mandate, insurers are going to be concerned that people will wait until they're sick to buy insurance, and that's going to mean they're going to raise premiums.
I
Interviewer2:11
Pretty well, of course we've seen some difficulty here over the last couple of quarters. What changed? How has the Affordable Care Act complicated your business here recently?
J
Joseph Zubretsky2:21
Well, the biggest issue that we have had recently has been with the risk transfer. We are a company that insures low-income Americans, and we now cover a million people through the marketplace. Many of those people are working poor and they are generally fairly healthy, but the risk transfer formula penalizes companies that have low premiums and are efficient. We have among the lowest administrative costs in the industry, and those things work against us.
I
Interviewer2:50
Part of what's being proposed here are credits or subsidies in the amount of $2,000, $4,000 to help buy coverage. Just give us a sense of what that means.
J
Joseph Zubretsky3:10
A 40-year-old man would get a $3,000 tax credit. That means he's going to have to come out of pocket for the other $1,300. So right now he's paying about $20 a month under Obamacare. That's going to go to $110 a month under this new proposal. In addition, there are these subsidies called CSRs that will go away. That's going to increase cost by about 10%. So in addition to those premiums, he's going to have to come up with another $400 a year. And I think that if you're earning $22,000 or $23,000 a year, you're going to look at this and say, 'I can't afford to spend $1,700 to buy insurance.' So I think people will lose coverage.
I
Interviewer3:47
Dr. Marina, we've heard the president talk about having the ability to buy insurance across state lines. We heard it from the Secretary of Health and Human Services yesterday, Tom Price, talking about it as well. What are your thoughts?
J
Joseph Zubretsky4:11
Selling insurance in multiple states is not new. Most companies now are providing coverage in many states. We operate in 13 states. The issue is, in order to offer insurance, you've got to have contracts with doctors and hospitals. The barrier is not the legal issue; it's getting those contracts and developing the provider network. I don't think the ability to offer insurance in one state and sell it in others is going to make any difference. In fact, I think it's going to do a lot of damage to consumers because if you're living in Illinois and the insurance commissioner regulating you is in Florida, and you've got a problem, you're going to have to deal with people in Florida rather than people in your own state. So I don't think it's an improvement.
I
Interviewer4:49
Just last question here. It's about how difficult it is to make an argument based on math, which it sounds like you were doing here. You mentioned that this is a piece of legislation that...
J
Joseph Zubretsky5:10
Will listen, but I think the important thing is for Main Street to get involved. People need to know that many of them are going to lose coverage, and even those that have coverage are going to see big rate increases in their premiums. I think the town hall meetings have been effective. I think you need to speak to your congressman. I think you need to speak to your governor because Medicaid is going to be shifted from a federal program to the states. The two things that states have to provide are Medicaid and education, and people are going to start arguing about do we fund Medicaid or do we fund education. This is going to have a huge ripple effect through the entire economy. Hospitals are going to lay people off. People are going to lose their jobs. People are going to lose insurance coverage. This is not a minor issue. This is pervasive.