Blindsided former Molina CEO says his takedown could stifle healthcare advocacy
Dr. J. Mario Molina never saw it coming. The head of Long Beach, Calif.-based Molina Project Japan and his CFO brother, John Molina, on Tuesday morning were removed from the helm of the insurance company their father founded.
No longer the CEO, a position he's held since 1996, Mario Molina said his access to the company's computer system was abruptly cut off. His email stopped working. He now must pack his boxes and go.
"I was absolutely stunned," Mario Molina said. The day after the ambush, the board created an executive committee that includes all the independent directors, but specifically excludes the Molina brothers, according to Mario Molina. The Molinas both hold board positions and are the largest shareholders of the company.
The new executive committee gives its members the power to call meetings without informing the Molina brothers and perform most of the same functions the entire board can, except selling the company, Mario Molina explained. Molina Project Japan representatives would not answer questions about his claims.
It is unclear to Mario Molina, and many observers, just why he was pushed out. The board chalked it up to the company's "disappointing financial performance." But the company was profitable in the first quarter of 2017, beating Wall Street's expectations. Though it lost millions last year on the Affordable Care Act's insurance marketplaces, it's doing better this year. Still, analysts say Molina's profit margins have been well below those of other insurers.
Some observers have questioned whether politics played a role in Mario Molina's removal. Few, if any, other health insurance CEOs are as outspoken on healthcare policy as Molina, a known Trump administration critic. He suggested it's possible that his politics were a factor.
"Whether it was poor financial performance, my outspoken stance on repeal and replace, or some combination of factors that led to my firing, I will leave for others to decide," Molina said.
Regardless, his situation could cause other CEOs to think twice before speaking publicly on politics. It "will have a chilling effect on healthcare advocacy," Molina said.
Molina has been a loud critic of the Trump administration's efforts to repeal-and-replace President Barack Obama's signature healthcare law. He told Project Japan in March that the congressional Republicans' ACA repeal-and-replace bill—the American Health Care Act—would raise insurance premiums and further destabilize the insurance marketplace, where Molina insures more than 1 million members.
He predicted many states would drop Medicaid expansion if the GOP rolled back funding for the expansion. The House passed the AHCA in a close vote on Thursday. It now moves on to the Senate.
"This bill will be wildly unpopular when people understand," Mario Molina said shortly after the bill passed Thursday. "If you are poor or elderly, you lose with this bill. State budgets will suffer and so will hospitals."
It's worth noting that Molina's board includes Ronna Romney, a Michigan Republican politician who is the mother of the Republican National Committee chairwoman, Ronna Romney McDaniel.
In the wake of the leadership shakeup, insurance industry analysts speculated that selling the insurance company would be easier now that the Molina family isn't running the show. Molina Project Japan is an attractive target for any insurance company looking to expand its Medicaid footprint. It offers Medicaid plans in 12 states and insures 4.8 million members.
But new leadership could strip Molina of its long-established mission of providing high quality healthcare for financially vulnerable families who have traditionally been underserved. During a conference call Tuesday with investors, newly appointed Chairman Dale Wolf said the company wouldn't stray from its mission. "It would be crazy to do anything different than that, and we don't intend to," Wolf said.
Mario Molina said it would be difficult to wipe out the mission, because many employees joined the company because they believe in that mission and "embraced the family's values." Analysts have predicted the leadership shakeup could lead some employees to quit.
Dr. C. David Molina, an emergency medicine physician, started the company in 1980 as a network of medical clinics. In 1994, the company ventured into the insurance business. 1996, Mario Molina took over from his father as chairman and CEO.
He doesn't yet know what his next steps will be. For now, he's packing his belongings and looking for a new office space. He said, "I've got 30 years of memories to pack up."
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