The Lund Report

The Oregon Senate passed a Medicaid tax on hospitals, insurance plans and risk coverage for self-insured employers on Thursday.

Insurance officials in Oregon and California have approved a deal between Moda Health and Delta Dental of California that will give the Oregon-based company a much-needed infusion of cash.

According to a press release, Delta Dental will invest $152.4 million and gain a 49.5 percent state in Moda. The deal will allow the two companies to expand their offerings and reach.

Robert Gootee, president and CEO of Moda, called Delta Dental a longtime partner that's committed to excellence and innovation. 

“By combining resources and strategies, we can expand our capacity to serve existing and new markets," Gootee said. "This strategic investment enhances each company’s ability to succeed in the evolving health care market while continuing our respective traditions of community engagement.”

Mike Castro, CEO of Delta Dental of California, added: “This strategic partnership will enable both organizations to share their complementary expertise." 

The two companies announced the partnership at the end of August. The deal was thrown into doubt earlier this year amid criticism over Delta Dental's spending and scrutiny by California regulators. 

The California Department of Managed Health Care approved the deal along with the Department of Consumer and Business Services in Oregon.

The capital infusion will put Moda on a secure financial footing, enable it to expand its dental plans and give Delta Dental a foray into the health insurance market.  

The two companies have a long history, dating to 1955 when Delta Dental of California and ODS, Moda's parent corporation, worked with dentists in California, Oregon and Washington to form the first independent pre-paid dental plans. They later became Delta Dental Plans Association. 

Moda offers Delta Dental plans, along with pharmacy and medical coverage. Besides Oregon, it serves residents in Washington and Alaska. Delta Dental of California, a not-for-profit organization, offers dental coverage in 15 states under their own brands.

Financial reports show that Delta Dental has continued to grow, with a net income of nearly $178 million in 2017 and almost $80 million at the end of the first two quarters of this year. 

Moda has survived several rocky years following losses under the Affordable Care Act. It filed a lawsuit against the federal government of millions it said it was owed under the "risk corridor" program. That suit is awaiting a hearing in the U.S. Supreme Court.

Have a tip about health care? Contact Lynne Terry at [email protected].

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