Private Medicare Advantage Could Hit 70% Market Share

By | June 18, 2019

Enrollment of seniors in private Medicare Advantage plans could reach 70% of those eligible for federal health benefits for the elderly between 2030 and 2040, a new report shows.

For now, the regulatory and political environment remains positive for expansion of Medicare Advantage, which allows private health plans to contract with the federal government to provide medical benefits to seniors. Medicare Advantage plans provide extra benefits and services to seniors, such as disease management and nurse help hotlines, as well as some plans providing vision and dental care. 

“Today the status and long-term structure of healthcare reform remain in flux, but MA enrollment is still growing — and with largely bipartisan support,” the report released this week by L.E.K. Consulting on Medicare Advantage penetration shows.

Enrollment in MA plans surpassed 22 million last year, which is 35% of total Medicare beneficiaries. “Looking ahead, we expect enrollment growth to continue in line with our previous forecasts of 7.7% compound annual growth rate (CAGR) to reach 47% penetration, or just over 37 million members in 2025,” L.E.K. executives Andrew Kadar, Andrew Garibaldi and Daniel Parker wrote in their 7-page report.

Health insurers Humana, UnitedHealth Group, Anthem, Cigna and CVS Health’s Aetna health insurance business dominate the Medicare Advantage business while Centene is poised to expand with its proposed acquisition of WellCare Health Plans. Meanwhile, several startups like Bright Health and Oscar Health are looking to expand into Medicare Advantage.

Health insurers see growth thanks in part to changes by the Trump administration in regulations that allow Medicare Advantage plans to cover more supplemental benefits. MA plans are also benefitting from more than 10,000 baby boomers turning 65 every day and becoming eligible for Medicare.

“As seniors increasingly eschew Original Medicare in favor of lower payments, enhanced care management and more cost certainty, with encouragement from both health plans and, albeit indirectly, the government, we expect that growth to continue — to 47% penetration by 2025 and, eventually, up to as high as 70%,” L.E.K said in its report. “Payers will therefore need to take aggressive action to grow market share of their Medicare Advantage offering. That could include expanding into new counties, investing in targeted sales to age-ins, and designing new products to attract new members and keep them healthy.”

A wild card could emerge after the 2020 Presidential elections should supporters of a single-payer version of “Medicare of All” succeed in their efforts and potentially diminish the role of insurers in the Medicare program.

“While we remain bullish on the emerging value proposition of Medicare Advantage as the highest-value product choice for a majority of seniors in the current environment, there are at least two regulatory uncertainties that could meaningfully impact the outlook for Medicare Advantage enrollment and penetration and that we monitor closely; proposals for ‘Medicare for All’ and CMS’ recently announced Primary Cares Initiative,” authors of the L.E.K. report wrote.

With two dozen Democrats running for President in 2020 to challenge Donald Trump in 2020 should Republicans re-nominate him to run for re-election to a second term, the Democratic Party’s candidates are backing everything from a single payer approach to Medicare for All to efforts that allow Americans under the age of 65 to buy into Medicare coverage.

Democratic U.S. Sens. Cory Booker of New Jersey, Kirsten Gillibrand of New York, Kamala Harris of California, Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts were among 17 Senators who introduced the Medicare for All Act of 2017. This legislation, which would expand Medicare more broadly to Americans of all ages, would have no premiums, limited cost-sharing and replaces all private insurance along with Medicaid and the Children’s Health Insurance Program.

“These proposals are still in their early days and could have dramatically different impacts on Medicare Advantage enrollment as we know it today,” the L.E.K. report said. “A single payer proposal such as the version proposed by Sen. Bernie Sanders could bring an end to private health insurers’ involvement in Medicare and thus Medicare Advantage entirely. On the other hand, a ‘Medicare Advantage for All’ approach or enabling early buy-in into Medicare (and Medicare Advantage) could dramatically expand Medicare Advantage enrollment.”

Forbes – Healthcare