As Moda rebuilds, possible downsizing looms

Article by Elizabeth Hayes | Featured on BizJournals | Image Credit: /

After a difficult two years, Moda Health CEO Robert Gootee has a plan to guide the company through the turbulent waters ahead. It’s a plan that could include layoffs among Moda’s 1,750-person workforce.

The Lund Report on Wednesday reported that the company anticipates cutting costs by $30 million. Referencing an internal memo, the article noted that the downsizing may include layoffs in the company’s health insurance business, in addition to administrative cuts.

Asked for a response, Moda spokesman Jonathan Nicholas told the Business Journal that “We anticipate a decline in our 2016 ACA membership. As a result, our employment base — as well as many other administrative expenses — will adjust.”

The downsizing follow the financial blows that struck Moda in 2014 and 2015, a result of the company’s aggressive push into the health insurance market following the Affordable Care Act.

The health plan suffered heavy losses and took a $170 million hit from a shortfall in a key government program designed to lessen risk in the early years of health reform.

“They really did make a big bet on the ACA, and they really made a big play for market share, and no matter what their intent was, they bet they could be successful offering the lowest cost product, and they brought in a lot of customers,” said Jesse O’Brien, who follows insurance rate requests closely as health care advocate with OSPIRG.

There was speculation at the time that Moda deliberately underpriced their products, a theory the company dismisses.

“I preferred to think they were coming up with new ways to contain costs,” O’Brien said. “That hasn’t fully worked out, obviously. Rates have gone up substantially for Moda customers. One way of looking at it is the traditional actuarial way, which is that they underpriced the risk, and another is that they didn’t do enough to keep down costs. ”

You can read more details about Moda’s big bet on health insurance and hear from CEO Robert Gootee on his plan to right the ship in tomorrow’s print edition.

Here’s a preview: Despite the challenges ahead, Gootee has few regrets about his company’s bold foray.

“People need health care,” he said. “It’s expensive. It’s finding ways to make people as healthy as they can be at costs they can afford over time. That’s what we’re all trying to accomplish.”

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