By Shelby
Livingston | December 31, 2016
While Medicare Advantage plans added nearly 900,000 members in
2016, enrollment grew at a slower pace than in recent years. Still, experts say
the future of the program will be lucrative for insurers.
“It's the only safe game in town, in all of health insurance,” said John Gorman, a former CMS official who is now a healthcare consultant in Washington.
Enrollment in the private, managed-care version of Medicare grew 5% to nearly 18.7 million in the 12 months since Dec. 1, according to the latest federal data. By contrast, it was up 6.8% at the end of 2015 and 9.8% in 2014.
UnitedHealth Group, Humana, Kaiser Permanente and Aetna still hold the throne for the most Medicare Advantage plan members. Enrollment in UnitedHealth's Advantage plans grew 13.2% to just shy of 4 million members.
“It's the only safe game in town, in all of health insurance,” said John Gorman, a former CMS official who is now a healthcare consultant in Washington.
Enrollment in the private, managed-care version of Medicare grew 5% to nearly 18.7 million in the 12 months since Dec. 1, according to the latest federal data. By contrast, it was up 6.8% at the end of 2015 and 9.8% in 2014.
UnitedHealth Group, Humana, Kaiser Permanente and Aetna still hold the throne for the most Medicare Advantage plan members. Enrollment in UnitedHealth's Advantage plans grew 13.2% to just shy of 4 million members.
Humana, though still No. 2 in plan members behind UnitedHealth,
lost nearly 40,000 plan members this year when a large group account went to a
private exchange in January.
And Cigna, which was sanctioned by the CMS in January for failing to comply with the agency's Medicare rules, only enrolled about 4,000 members in 2016. Because of the sanctions, Cigna wasn't able to participate in Medicare's annual enrollment period, which ran from Oct. 15 to Dec. 7. If the Bloomfield, Conn.-based insurer doesn't fix the problems soon, it could see its Medicare membership plummet.
Part of the slowdown of the program's overall enrollment can be attributed to funding cuts imposed by the Affordable Care Act starting in 2012 and phased in over the last five years. Those cuts were devised to help offset the cost of the ACA exchanges and bring Advantage payment rates in line with traditional Medicare.
In response to the cuts, plans reduced benefits and raised premiums, among other cost-saving measures, Gorman said. Plans are likely to see a boost in payments in 2018, he said. “Then you'll see a return to richer benefit designs with lower premiums and out-of-pocket costs.”
Gretchen Jacobson, an associate director with the Kaiser Family Foundation's program on Medicare policy, said there's not enough data available to know if benefit designs have truly gotten leaner because of the funding cuts. But premiums, she said, have been relatively flat while caps on out-of-pocket costs have increased 25% on average since 2011.
And Cigna, which was sanctioned by the CMS in January for failing to comply with the agency's Medicare rules, only enrolled about 4,000 members in 2016. Because of the sanctions, Cigna wasn't able to participate in Medicare's annual enrollment period, which ran from Oct. 15 to Dec. 7. If the Bloomfield, Conn.-based insurer doesn't fix the problems soon, it could see its Medicare membership plummet.
Part of the slowdown of the program's overall enrollment can be attributed to funding cuts imposed by the Affordable Care Act starting in 2012 and phased in over the last five years. Those cuts were devised to help offset the cost of the ACA exchanges and bring Advantage payment rates in line with traditional Medicare.
In response to the cuts, plans reduced benefits and raised premiums, among other cost-saving measures, Gorman said. Plans are likely to see a boost in payments in 2018, he said. “Then you'll see a return to richer benefit designs with lower premiums and out-of-pocket costs.”
Gretchen Jacobson, an associate director with the Kaiser Family Foundation's program on Medicare policy, said there's not enough data available to know if benefit designs have truly gotten leaner because of the funding cuts. But premiums, she said, have been relatively flat while caps on out-of-pocket costs have increased 25% on average since 2011.
Gorman said he expects annual growth in Medicare Advantage
enrollment to hover between 5% and 7% in the coming years barring any major
legislative changes to the market. It will be the safest option for insurers as
the Trump administration and Republicans in Congress work on legislation
dismantling the ACA, which many observers worry will cause the individual
insurance market to collapse unless a replacement plan is adopted at the same
time.
And while Republicans are also signaling they want to overhaul Medicare, it's unlikely they would do anything to undermine the Advantage program. The “premium support” model favored by House Speaker Paul Ryan would funnel many more beneficiaries into private plans.
Advantage carriers, meanwhile, are jockeying for market share through acquisitions. Medicaid managed-care insurer Centene, which has been investing heavily in its Medicare Advantage business, saw enrollment explode to more than 302,000 from about 34,000 last year, largely due to its recent acquisition of Health Net.
In November, WellCare Health Plans said it would acquire Medicare insurer Universal American Corp. for $800 million. The deal would boost WellCare's quality ratings, which are generally low. About 70% of Universal American's 114,000 Medicare Advantage members are in plans with at least four stars.
Aetna's Medicare Advantage business will soar if it clinches the pending acquisition of Humana. Even after selling off Advantage assets to Molina Healthcare—which Aetna proposed as a way to resolve the U.S. Justice Department's antitrust concerns—the deal would probably still put the combined company ahead of UnitedHealth as the biggest Advantage carrier.
And while Republicans are also signaling they want to overhaul Medicare, it's unlikely they would do anything to undermine the Advantage program. The “premium support” model favored by House Speaker Paul Ryan would funnel many more beneficiaries into private plans.
Advantage carriers, meanwhile, are jockeying for market share through acquisitions. Medicaid managed-care insurer Centene, which has been investing heavily in its Medicare Advantage business, saw enrollment explode to more than 302,000 from about 34,000 last year, largely due to its recent acquisition of Health Net.
In November, WellCare Health Plans said it would acquire Medicare insurer Universal American Corp. for $800 million. The deal would boost WellCare's quality ratings, which are generally low. About 70% of Universal American's 114,000 Medicare Advantage members are in plans with at least four stars.
Aetna's Medicare Advantage business will soar if it clinches the pending acquisition of Humana. Even after selling off Advantage assets to Molina Healthcare—which Aetna proposed as a way to resolve the U.S. Justice Department's antitrust concerns—the deal would probably still put the combined company ahead of UnitedHealth as the biggest Advantage carrier.
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