moda-center-rendering.jpg

On the night of the Blazer's 2015-16 season opener. Moda Health Plans, which paid millions to be the name sponsor of the Blazer's building, is struggling through a difficult financial environment. Photo courtesy of the Moda Center

(Courtesy of Moda Center)

Moda Health Plan Inc. is pulling out of the state of Washington and will soon do the same in California, the latest sign of turbulence at the Portland-based health insurer.

Moda, one of Oregon's largest health insurers, has suffered two consecutive years of losses, a depletion of capital and heightened regulatory scrutiny after an aggressive push into new insurance markets mandated by the Affordable Care Act proved a financial disappointment.

Moda learned earlier this month that it will receive only $11 million of the nearly $90 million it was expecting from the federal government to cover costs related to the Affordable Care Act.

That loss led A.M. Best, which analyzes the financial strength of insurance companies, to say it would review and potentially lower its rating of Moda's financial condition. Best said this would be due to "the considerable capital strain" that the loss of the federal money could have on the company.

Robert Gootee, Moda CEO, insisted Wednesday that the company can weather the storm. Moda's parent company, Oregon Dental Services, has ample capital to support Moda, he said.

Moda delighted local proponents of health care reform in 2014 when it unveiled the lowest-cost plans in Oregon for the new individual health insurance market created by the Affordable Care Act. While some of Oregon's largest insurers took a wait-and-see approach, Moda's cheap plans won the company more than 100,000 new customers just in Oregon.

It marked the second high-profile move by the once-obscure provider of dental insurance in a year. In 2013, Moda signed an arena-naming deal with the Portland Trailblazers that resulted in the Rose Garden becoming the Moda Center.

But the push into the individual market came at a heavy cost.

Many of the new customers, some of them who'd been uninsured for years, made heavy use of health care providers. Their claims pushed Moda to a $33 million loss through the first six months of 2015 and eroded its capital - a key benchmark of the company's health.

Gootee acknowledged the company was caught off guard by the heavy claims filed by its new customers.

"The health of the new pool was much worse than anticipated," he said.

Last December, Moda borrowed $50 million from Oregon Health and Sciences University. The two are partners in several ongoing initiatives.

Moda is not the only insurer struggling in the new environment. Health Republic, one of two Oregon-based health insurance co-ops, closed its doors earlier this month after learning it too would not be receiving the federal assistance pledged by the federal government.

The Oregon Insurance Division is monitoring Moda's financial condition but agency officials refused to say whether they have ordered the insurer to raise additional funds or to make other changes.

Moda announced Wednesday afternoon it will quit doing business in Washington. The company has also given notice to California regulators it will end operations there in six months.

In walking away from Washington, Moda is jettisoning about 47,000 customers.

-- Jeff Manning

503-294-7606, jmanning@oregonian.com