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.”
Follow me on Twitter or LinkedIn. Check out my website or some of my other
work here. Bruce Japsen Senior Contributor
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