Medicare Advantage Is Still Going Strong

A new report shows strong potential for the Medicare Advantage market.

There are a number of items shaking up the Medicare Advantage space lately, from steeper star ratings to broker constraints. However, a new report has an optimistic outlook for MA, even as growth begins to slow down.

Findings in a recent report by Chartis show that Medicare Advantage growth seems to be slowing, despite enrollment gains. In 2023 MA grew by about 5%, or 1.7 million new members, slower than the year before which was at around 9%, or 2.7 million members. The rise comes from a growing senior population, yet has been overshadowed by factors like regulatory pressures, decreased star ratings, and soaring medical costs.

A majority (86%) of the market’s growth in the past year has come from for-profit insurers like Humana, Aetna and UnitedHealth. Collectively, these three giants captured 1.4 million new beneficiaries. This enrollment growth follows a big MA milestone of over 50% of Medicare-eligible persons enrolling in an MA plan.

According to the Chartis survey that looked at 19 insurers, even with a decrease in growth, almost 80% of health plan executives were optimistic about the next five years, and they are expecting neutral or positive outcomes. Roughly 84% also anticipate membership growth that is equal to or greater than this year, showing payer confidence in the stability and overall growth potential of the Medicare Advantage market.

Ratings

Medicare Advantage has wrestled with many different opponents, such as new methods of calculating star ratings. During the pandemic when relief provisions were high, MA ratings shot up. As regulators noticed this and pulled back on them, they started new methods of calculating ratings, which then fell for many insurers. Elevance even went through a lawsuit with HHS over their low ratings and managed to come out with new ratings and a hefty payout. Quality of plans remains a concern as plans struggle to maintain high quality ratings, with roughly one-quarter of beneficiaries enrolled in a plan with less than four stars, according to the report.

Special Needs Plans and Social Vulnerability

Special needs plans are also gaining more traction in the Medicare space. The Chartis report looked at SNPs which have recently surged, with an addition of over 1M new members. Almost 7 out of every 10 MA enrollees opted for SNPs.

The report also dug into another not-so-obvious factor, the relationship between MA enrollment and social vulnerability. It found the counties with higher vulnerability scores showed greater penetration rates, about 53%, when compared to counties with lower scores, about 45%. These statistics show how market dynamics are playing into the greater picture of MA.

Nick Herro is the Chartis Director in Strategic Transformation and co-author of the report. He says that although the MA market has matured a great deal over the last several years, demand continues mainly due to changing demographics and consumer preference over traditional Medicare.

"We are confident demand for Medicare Advantage will hold steady,” Herro said in a press release. “While plan executives acknowledge the headwinds facing the industry, the majority express optimism about the next five years."

Taking all of these factors into consideration, the Medicare Advantage market could gain even more traction and attention from payers as outlook reports seem promising. However, maintaining high quality ratings and keeping up with the demand and shifting market dynamics could outweigh the promise of stability and growth potential of the market.