Insurers Make Billions From Medicaid: Report

CALIFORNIA -- Medicaid is proving to be a money-maker for some insurance companies.

The program, which provides social welfare to Americans living below the poverty line, helped Centene Corp. earn more than $1 billion in profits from 2014 to 2016, according to a report by Kaiser Health News.

The St. Louis-based health care company isn't the only one earning a profit from the government program that provides health coverage to 68 million Americans.

"Medicaid insurers in the Golden State made $5.4 billion in profits from 2014 to 2016, in part because the state paid higher rates during the inaugural years of the nation’s Medicaid expansion under the Affordable Care Act," reads the Kaiser Health News article. "Last year, they made more money than all Medicaid insurers combined in 34 other states with managed care plans."

But the program, which covers 13.5 million people in California, wasn't always a source of income for insurance companies. It all changed when the President Barack Obama's Affordable Care Act was implemented.

"Before the ACA expansion, California’s Medicaid plans collectively were barely in the black, with $226 million of net income for 2012 and 2013 combined," according to the article. "Traditionally, these insurance contracts have yielded slim profit margins of 2 percent to 3 percent. California said it aims for 2 percent when setting rates, based on prior claims experience and projected costs."

When the Affordable Care Act was widely implemented in 2014, insurers saw drastic changes in the revenue generated.

Some of the biggest changes happened for Anthem Blue Cross, which saw a loss of loss of $58 million in 2012 then a net profit of $237 million in 2016. LA Care Health Plan also saw a drastic change with $15 million loss in 2012 to a net profit of $239 million in 2016, according to data gathered by Kaiser Health News.

Other examples include Health Net, which saw a net profit of $17 million in 2012 to a net profit of $417 million, and Care 1st Health Plan, which saw a loss of $13 million in 2012 and a profit of $42 million in 2016, according to the data.

Despite insurers generating billions of dollars off the government-sponsored program, low-income Americans may still not be getting the best health care.

Insurers in California received an average score of 63 percent in 2016 for its performance on providing health care, according to the article.

"For Centene and its Health Net unit, seven of its 10 regional health plans in Medi-Cal scored below average on quality. The company’s San Joaquin health plan ranked last statewide at 31 percent," the Kaiser Health News article reads.

The investigative article by Kaiser Health News comes in the heels of the Trump Administration attempting to repeal certain measures of the Affordable Care Act.

Seema Verma, administrator for Centers for Medicare and Medicaid Services, said Tuesday that the administration will allow states to require that Medicaid recipients work or volunteer, according to a USA Today report.

"States will also be graded based on how much they improve the care of their Medicaid recipients, just as hospitals and nursing homes are graded by CMS now based on the quality of the care they provide," according to the article.

Medicaid was implemented in 1965, alongside Medicare, by President Lyndon B. Johnson. The Affordable Care Act allowed states to expand the eligibility requirements of the program in 2014.

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