One HMO Scores Big in Governor's Health Plan

It pays to work for the government, a seemingly endless source of cash.

Looks like Molina Healthcare Inc., based in Long Beach, is the biggest winner so far under Gov. Arnold Schwarzenegger's healthcare overhaul. The HMO provides coverage for government-funded MediCal patients in California. Molina's stock is up well over 3% in morning trading on the news the Republican governor wants to expand MediCal by 1 million people and increase MediCal reimbursements.

UPDATE: Molina now up 5%. Click here to track.

Health Net, another MediCal contractor - where Schwarzenegger's former chief of staff Pat Clarey and press secretary Margita Thompson now work - also could gain if the governor's plan goes through. But its stock is down slightly today, along with most other health plans, on fears that Schwarzenegger's proposal could shrink profits by requiring 85% of revenues to be used for patient care.

Molina, on the other hand, gets most of its revenue from MediCal contracts and, unlike Health Net, it owns and operates about 20 clinics. So it would be able to both expand its business and collect larger reimbursements for its provider services. By far, in terms of percentage of revenue growth, Molina would be the biggest beneficiary of the governor's plan.