Moda Health acquires Delta Dental’s stake in the company 2 years after the investment in the liferaft

Moda Health, one of Portland’s largest health insurers, recovered from the financial crisis and regained its independence.

Thanks in part to the proceeds of Moda’s $ 250 million Supreme Court victory over the federal government, the company reached a deal on Monday to buy back the stake it had sold to a California dental insurance company in the era when she was running out of cash to the point of insolvency.

In 2019, battered by losses and the federal government’s refusal to pay the promised financial aid, Moda was in desperate need of a financial savior. He made a deal to sell nearly half of the business to a San Francisco-based dental insurer called Delta Dental.

The historic Affordable Care Law profoundly changed the health insurance industry after it came into effect in 2010. Faced with this uncertainty, some insurance companies have played it safe and refused to pursue the new markets created by the law.

Moda thrilled local healthcare reform supporters in 2014 when he unveiled Oregon’s cheapest plans for the new individual health insurance market. Moda’s inexpensive plans have helped the company gain over 100,000 new customers in Oregon alone.

But Moda priced his insurance too low to cover claims, resulting in significant losses. More bad news came when Moda announced that it had not received $ 210 million in promised payments for the federal government’s risk corridor. The “risk corridor” payments, authorized by the Affordable Care Act, were intended to assist insurers who agreed to participate in new markets created by the law, despite the risks.

Moda lost $ 227 million in 2018. State regulators have taken the first steps to bring the company under state supervision.

Moda sued the government for the risk corridor payments. Several other insurers had done the same. Moda claimed the companies had fallen victim to a “$ 12 billion bait and trade.”

In April 2020, the Supreme Court ruled 8-1 in favor of insurance companies. Moda raised around $ 250 million.

Moda executives thanked Delta for stepping in when needed.

“We greatly appreciate the long-term partnership we have shared with our friends and colleagues at Delta Dental of California,” said Robert Gootee, President and CEO of Moda. “Their strategic investment a few years ago has helped us maintain and expand our various strategies at a critical time.

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