The cuts follow removal of CEO and CFO due to financial losses blamed on Affordable Care Act market.
Molina Healthcare, which fired its CEO and CFO in May due to the poor financial performance of the company, will eliminate about 1,400 jobs over the next few months, according to an internal memo obtained by Reuters.
The cuts are due to financial losses blamed on Molina’s individual business in the Affordable Care Act market, in which it has been a major player.
Molina will reduce its workforce by the elimination of 10 percent of its 6,400 corporate positions and about 10 percent of 7,700 health plan jobs, according to Reuters. It will not affect Molina’s Pathways behavioral health business, which employs about 5,500 people.
Interim CEO and CFO Joe White sent the memo to employees saying the cuts aim to contribute to savings by 2018 in what he called “Project Nickel,” to do more with less.
In March, Molina was touted as an ACA success story.
Former CEO J. Mario Molina, MD, was an outspoken opponent of the Republican plan to repeal and replace the ACA. His brother, John C. Molina, who served as CFO. was also let go in a decision by the board to turn around the company’s financial position.
Last week Molina said it was concerned about Republicans repealing the ACA without having a replacement plan in place, the roll back of Medicaid expansion and the lack of a guarantee of federal cost-sharing reduction payments, which allows insurers to offer lower-income consumers lower deductibles and out-of-pocket expenses.
Molina also argued for the continuation of the individual mandate to get insurance.
“The bedrock of any coverage system is a requirement that people must obtain health insurance,” Molina said. “The lack of such a requirement will be detrimental to the individual market risk pool and will result in adverse selection, which would significantly increase costs.”
In June, Molina said it would file rates for 2018 to remain in the exchange market in Florida.
The California Department of Insurance is releasing on August 1 the insurers which have filed rates for the ACA market in 2018.