Moda’s Vast Pool of Resources Makes the Rose Garden Affordable

At the same time, its health insurance enrollment has grown by 34 percent over the past two years.
The Lund Report

 

August 27, 2013 -- Moda Health, which has purchased the naming rights for the Rose Garden basketball arena, appears to have adequate resources to afford the deal, according to insurance reports filed with the National Association of Insurance Commissioners.

During 2012, it earned $5.3 million in net profits on top of its investments in the stock and bond market.

Over the next ten years, Moda expects to pay out $40 million for those naming rights. It’s been quite a change for the company, which until recently went by ODS and was best known for its dental insurance.

But when it comes to health coverage, the insurer may be gunning for the top spot but still has a long way to go.

Today it insures just a fraction of the people covered by Oregon’s largest insurance companies, ranking fifth among the state’s seven large health insurers, up from the No. 6 spot a year ago.

According to a Lund Report review of financial reports, the top health insurers in Oregon are:

  1. Regence BlueCross BlueShield of Oregon, with 494,394 members, a 7.7 percent one-year climb.

  2. Kaiser Permanente, with 467,105, a 1.4 percent one-year drop.

  3. PacificSource Health Plans, with 218,087, a 0.4 percent tick down.

  4. Providence Health Plans, with 188,245, up 2 percent.

  5. Moda Health, with 82,464 members, up 15 percent in one year.

  6. Health Net Health Plan of Oregon, with 67,952, down 22.9 percent.

  7. LifeWise Health Plan of Oregon, with 52,171, down 3 percent.

Regence, Kaiser, PacificSource and Providence, with their large member bases, have for years dominated the state. But if Moda continues its current trajectory, that could change.

Even though Moda’s enrollment has grown by 34 percent over the past two years, that figure likely vastly underestimates its reach. It omits the thousands of Oregon state and school employees who receive Moda coverage through the Public Employees Benefit Board or Oregon Educators Benefit Board, nor does it include people covered through self-insured private companies.

Also in the three state region of Oregon, Washington and Alaska, Moda insures two million people in its health, dental, vision and pharmaceutical plans.

When the new Oregon health exchange debuts in October, Moda’s member rolls could grow still further. In the past few weeks it’s emerged as the cheapest company to offer health coverage to individuals through the exchange, known as Cover Oregon.

Moda officials did not respond to a Lund Report request for comment, but CEO Dr. William Johnson addressed the company’s growth and name change at a press conference announcing its acquisition of the Rose Quarter’s naming rights.

“We began to expand our organization and our footprint, to go from a local company to a regional company, we looked at different opportunities to re-name the organization,” Johnson said. “The reason why we focused on Moda, Moda is derived from the Latin term modus, which means 'the way.' It goes back to the way to do more, the way to do better, the way to better health. That's where Moda derives from and we feel it's a direct fit, the synergies were just there.”

Just how Moda has fueled its recent growth can be difficult to discern from the documents it files with the National Association of Insurance Commissioners, but like all Oregon insurers it has a vast pool of assets available to draw on. Insurers are required to maintain a large pool of cash and investments on hand in case of unanticipated large claims, and in Oregon the largest companies all have saved far more than is required.

Moda had $240.2 million in assets as of June 30, including $128.4 million in bonds and $63.4 million in stocks. And for the past nine months the company has consistently posted quarterly profits, after reporting net losses for three of the previous four quarters. Its 2012 net profit of $5.3 million left the company with enough revenue after expenses to justify a $4 million in yearly spending it will take on with the Rose Garden deal, and in just the first six months of 2013 it has reported $3.4 million already.

That may leave Moda with wiggle room for its naming rights deal, but not much. Regence BlueCross BlueShield, PacificSource, Providence and Health Net all posted stronger profits in the first half of 2013, with Kaiser and LifeWise each reporting net losses. (See accompanying spreadsheet for details.)

Other trends revealed in second-quarter health insurance documents filed with regulators:

  • Regence has now been Oregon’s largest health insurance company for a full year. It took that spot from Kaiser in the third quarter of 2012.

  • Two insurers previously mis-calculated their rolls on their March 31 reports. PacificSource revised its first-quarter member count up by close to 10,000 people, while Providence revised its own estimate down by about the same amount.

  • Health Net continued to lose members, as it has done every quarter since the start of 2012. Over that period, its rolls have dropped from 90,494 to 67,592.

Courtney Sherwood is a freelance business reporter. She can be reached at csherwood@gmail.com or 503-208-4173.

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