Washington State Picks 5 Insurers For Medicaid Contracts

The 18-month contracts, which are subject to finalization, represent new-market entries for three of those firms but fresh competition for Molina, which already has a big presence in Washington. The state also picked a nonprofit group, Community Health Plan of Washington, in the bidding process to serve an expanding program for low-income health-care recipients.

The contracts in question are expected to cover about 840,000 people and go into effect July 1. The Washington process is the latest in a string of contests around the U.S. that are creating new revenue sources for Medicaid-focused insurers.

Market-share breakdowns for Washington aren't available before the state finalizes contracts--anticipated by the end of February--according to the state's Health Care Authority. But with three sizable competitors entering the market, while replacing two private local firms which didn't win new contracts, Molina could see its market share slip from current levels, analysts said.

Molina currently serves nearly half the Washington market, which represents, in turn, around 18% of the Long Beach, Calif., company's revenue. Molina didn't have an immediate comment on the matter Wednesday. The Medicaid-focused insurer's shares recently traded down 1.9% at $27.75.

Community Health Plan is also an incumbent Medicaid provider in Washington.

The Washington announcement "is clearly positive" for the three firms winning new business, but with market-share breakdowns still unclear, the news isn't yet a catalyst for stocks, Susquehanna analyst Chris Rigg said. Centene shares slipped 10 cents to $44.49, while Amerigroup traded down 0.6% at $70.19. Shares of much larger UnitedHealth recently traded slightly higher at $53.61.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

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