Even as major health insurers have been fleeing AffordableCare Act individual exchanges, Medicaid-rich players are reaping growth fromthe same marketplaces that have saddled major insurers with multimillion-dollarlosses.

MolinaHealthcare Inc. and Centene Corp. have experienced significant growth inindividual premiums during the first half of 2016 and are deriving benefitsfrom their Medicaid coverage. They also share a strategy of retaining memberswho are losing Medicaid coverage by offering alternative policies in themarketplace.

Molina, in particular, steered clear from the challengesthat exchanges have posed for the five major health insurers. The exchangeslandscape has seen a variety of changes, especially with large managed careinsurers withdrawing from marketplaces. To them, exchanges meant losses and nolonger came with meaningful financial exposure. Aetna Inc. was the latest in a series of insurers thatdecided to quit theirexchanges business, citing a deteriorating risk pool and an "ineffectiverisk adjustment mechanism." The company lost more than $200 million pretaxfrom exchange plans in the second quarter and expects 2016 losses to exceed$300 million.

Molina posted strong double- to triple-digit growth inindividual premiums written between 2014 and 2016, according to S&P GlobalMarket Intelligence data.   

A large part of that growth has been from the exchangesbusiness across nine states, Senior Vice President Lisa Rubino said.  

She said more low-income and uninsured individuals who couldnot afford a policy prior to the Affordable Care Act are now entering theindividual market.

Perhaps a challenge for the insurer has been attrition amongMedicaid members, which the company is combating by offering alternativeproducts on exchanges. Whenever an enrollee loses Medicaid, Molina offersbronze and silver plans to keep them in its network.

"We have some people losing coverage in Medicaid, andof course they can buy a subsidized policy in the marketplace," Rubinosaid, citing bronze, silver, gold and platinum products. Upon losing Medicaid,members buy silver products, which come with cost-sharing subsidies and lowerco-pays, she explained.

CFO John Molina took note of individuals whose Medicaid eligibilityfluctuated due to variability in income, adding that about 90% of Molina'smarketplace members get a government subsidy for premiums and co-pays. "Itis no coincidence that we have grown significantly in states that have notexpanded their Medicaid programs," Molina said during the company'ssecond-quarter earnings call.

Centene is doing its best to hold on to members its Medicaidprogram is shedding through its own exchange products, which go by Ambetter.

Ambetter is offered by Superior HealthPlan Inc., a Centenesubsidiary, and was among the top two contributors to the company's directpremiums for the first half of 2016, according to data.

"This shows it's working, silver subsidies," CEOMichael Neidorff saidat the Barclays Global Healthcare Conference. "We are not trying to begold, platinum type coverage, and I think that strategy has served us well."

The insurer has withdrawn its plans from the Arizonaexchange but may be considering a comeback with Ambetter. "We areevaluating opportunities to enter the state with our products, with ourAmbetter and some of those kinds of products," Neidorff Sept. 13 at the MorganStanley Global Healthcare Conference.

Molina will also enter a number of states in 2018. Rubino,however, did not disclose the specific programs that would be expanded to morestates. For the 2017 open enrollment season, Molina has added 19 countiesacross California, Washington and Utah, among other states, to its marketplaceservice area expansion.

Molina gained the most from Florida. The company addedmarketplace membership and Medicaid growth after buying Integral Health Plan'sMedicaid business in November 2015. Preferred Medical Plan Inc. sold itsMedicaid assets to Molina in August 2015, according to 'sfiling.

Although the company appears not to have immediate challengesin the exchanges marketplace, Jefferies analyst David Windley took a morecautious view. Molina's exchange margin has done better than its peers, but adeteriorating risk pool poses significant risk as more managed care insurersleave the market, he said. The "management's optimism may bepremature," he wrote in a July 27 note.