Medicare Advantage Enrollment Growth Higher for 2020
Medicare is now the fastest-growing segment of the health insurance market with 10,000 baby boomers aging into the program every day. Since 2010, Medicare Advantage enrollment has grown by about 8% a year on average. Roughly 24.1 million seniors and people with disabilities were enrolled in a Medicare Advantage plan this year which represents a 9% jump from the same time in 2019, according to the latest federal data. The 9% Medicare Advantage growth in annual enrollment is above the trend of the past decade. Boomers and Medicare beneficiaries were offered the largest selection of Medicare Advantage plans this past season — from startups to well-established carriers like United Healthcare, Aetna and Humana.
In 2000, the early years for Medicare Advantage, there were only 6.8 million seniors (or 17% of all Medicare beneficiaries) enrolled in a Medicare Advantage plan. In the twenty years since, Medicare now covers 68 million seniors, and of which, 24 million (36%) are enrolled in a Medicare Advantage plan. Medicare Advantage enrollment projections by The Congressional Budget Office (CBO) predict continued growth over the next decade, with Medicare Advantage enrollment by plan covering about 47 percent of beneficiaries by 2029.
United Healthcare, America’s largest private insurer, as well as its largest Medicare Advantage carrier grew its Medicare Advantage enrollment by 10% to 6.3 million people. The next largest carrier, Humana has 4.4 million members, BCBS affiliates have 3.6 million members, CVS Health has 2.6 million and Kaiser Permanente has 1.7 million. These plans represent more than half of the market share, but hundreds of new plans were added this year. Medicare Advantage plans are rated on a five star rating program. Medicare Advantage enrollment data for 2020 showed 78% of enrollees were in plans with ratings of at least four stars, compared to 2015 when only 62% of enrollees were in plans with a rating of at least four stars.
Dominance from the large carriers in market share has not thwarted the creation of new plans, in fact $3 billion has been invested across four highly publicized new companies — Bright Health, Clover Health, Devoted Health, and Oscar. Private equity firms and Wall Street are interested in investing in Medicare Advantage plans because they are drawn to the positive demographic trends, low market penetration rates (most states still have market penetration rates below 25%), friendly regulatory environment and profitability. Alignment Healthcare recently announced a Series “C” round of $135 million from professional investors; Fidelity Investments, T. Rowe Price and Durable Capital Partners after it increased its Medicare Advantage enrollment by 18% to nearly 70 thousand enrollees.
Reasons Experts Believe Medicare Advantage Growth in 2020 Was Strong
New Law Effective January 1, 2020
A bipartisan 2015 law that adjusted Medicare payments to doctors also grandfathered, beginning in 2020, the most popular Medigap plans. The legislation stipulates that effective January 1, 2020, all newly eligible Medicare beneficiaries cannot sign up for a supplemental plan that covers the Medicare Part B deductible, which is $166 this year. People who already have those types of policies will be exempted. Many experts believe that the absence of such policies will lead to Original Medicare enrollees having higher out of pocket for medical care expenses.
Strengthened Competition
Seema Verma, the CMS Administrator, stated earlier this year in a speech to the AMA. “In Medicare Advantage, we instituted historic reforms to strengthen competition. The result was 1,200 new plans added over two years with exciting new benefits. And these extra benefits came with a historic 28 percent decrease in member premiums, their lowest level in thirteen years.”
The Future of Medicare Advantage Growth
The continued decrease in member premiums, new benefits and less attractive Medigap options are all contributing to Medicare Advantage growth. With 10,000 boomers aging into the program every day, and beneficiaries being offered a larger selection of plans each new season, Medicare Advantage enrollment growth projections will only increase and continue to take on a larger role in the Medicare program over the next decade.
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Blog by: The ForeSee Medical Team