MOLINA HEALTHCARE Long Beach, California; Managed Care Firm Looks Beyond California.(THE NEW AMERICA)

Byline: MARILYN ALVA

After providing managed care services to many of California's low-income Medicaid clients for a quarter of a century, Molina Healthcare decided to strike out for greener pastures.

Most of those pastures are located far away from California, which has one of the lowest Medicaid premiums in the country and hasn't raised rates in years.

"In some respects, there's nowhere to go but up," said Molina Chief Executive Mario Molina.

Since going public in July 2003, Molina Healthcare has expanded beyond the Golden State into Washington, New Mexico, Michigan and Indiana. It's also talking with state officials in Ohio and has its eyes on other states with sizable Medicaid populations.

The company's membership roster at the end of 2004 tallied more than 788,000, nearly double the number four years ago and 40% more than the prior year.

"What drives earnings growth in this business is (membership) growth," said analyst Ed Kroll of SG Cowen & Co. "You sign up more Medicaid beneficiaries and then you leverage at the administrative cost line."