May 20, 2019
The rapidly expanding U.S. senior population
continues to present increasing opportunities for health insurers offering
Medicare Supplement plans. Many leading managed care organizations, Blues
plans, regional plans, and multiline carriers compete in the Medicare
Supplement (also known as Med Supp or Medigap) arena. As of December 31,
2018, the Med Supp market experienced yet another year of membership growth.
Based on performance data filed in annual financial statements from the
NAIC (National Association of Insurance Commissioners), enrollment in Medicare
Supplement plans was almost 13.6 million as of December 31, 2018, up 3.95%
year-over-year.
Mark Farrah Associates (MFA) identified 196
distinct carriers that filed annual data with the NAIC. Breakdowns of
in-force policies show that carriers issued policies to almost 5.3 million new
members written in the last three years. Carriers reported an aggregate
of 8.3 million members covered by older policies that had been issued prior to
the year 2016. This brief provides an overview of the Medicare Supplement
market with insights about competitive positioning and standardized plan type
preferences.
Medicare Supplement carriers added
approximately 517,000 covered lives to their portfolios between December 31,
2017 and December 31, 2018. About 17% of this market growth is attributed
to UnitedHealth’s membership increase. Among standardized plans A-N, Plan
F covers the annual Medicare Part B deductible and offers the most
comprehensive benefits. Per the graph below, Plan F enrolled almost 7.05
million Med Supp members and accounted for approximately 52% of the
market. However, this number decreased by 15,000 year-over-year.
This decline in Plan F membership is largely
due to a provision in the Medicare Access and CHIP Reauthorization Act
of 2016 (MACRA). Beginning January 1, 2020, Plan F will
no longer be an option for newly eligible Medicare enrollees, whereby
supplemental plans covering the Part B deductible can no longer be purchased.
Beneficiaries who continue to pay their existing Medicare Supplement Plan F
premium will not lose that coverage. This policy change has begun the
shift in growth from Plan F into Plans G and N which are widely seen as viable
alternatives to Plan F. Both Plans G and N continued to experience
year-over-year increases with Plan G notably enrolling 645,000 new members; a growth
rate of 39%.
**Note plan type “P” for Pre-Standardized is
used for policies issued prior to the enactment of the Omnibus Reconciliation
Act (OBRA) of 1990, which standardized benefits for Medicare Supplement plan
types. Plan type “O” or “Other” is used by carriers in a few states
including Massachusetts, Minnesota, and Wisconsin that receive waivers to the
standardized Medicare Supplement regulations.
The Medicare Supplement market remains an
attractive line of business for carriers. Med Supp plans collectively
earned approximately $31.3 billion in premiums and incurred $24.7 billion in
claims during 2018, up from 2017. The aggregate loss ratio (incurred
claims as a percent of earned premiums) was 78.9% in 2018, an increase from
77.7% in 2017.
The top 10 companies command almost 69% of the
Med Supp market with approximately 9.4 million members. UnitedHealth,
with its longstanding contract with AARP, continues to hold 34% of the market
with more than 4.5 million members. Mutual of Omaha ranked second with
10% market share and approximately 1.4 million members as of December 31, 2018.
CVS, formerly Aetna, supplanted Health Care Service Corporation (HCSC) as
the third largest plan in 2018, with 702,000 enrolled. Anthem
remains in the fifth ranking position for market share with over 590,000
members and Cigna experienced strong growth, increasing its membership by
129,000 members, with over 560,000 enrolled.
With over 65 million Medicare beneficiaries
residing in the U.S., Medicare Supplement policies continue to be a viable
option for seniors, as these plans can help pay some of the medical costs
not covered by Original Medicare. Therefore, insurers continue to
diversify their senior market portfolios to leverage opportunities across all
product lines and expand product options in order to keep up with industry
trends. Mark Farrah Associates will continue to monitor enrollment and
plan performance in this competitive segment.
About Med Supp Market Data
Med Supp Market Data, a subscription option
through Mark Farrah Associates’ Health Coverage Portal™, presents the latest
market share and financial performance data for Medicare Supplement
plans. The product includes state-by-state membership, premiums, claims
and loss ratios for plans nationwide. Online tables also include claims
contacts as reported in the financial statements as filed with the National
Association of Insurance Commissioners (NAIC). California managed care
plans do not file financial statements with the NAIC and are not included in
this analysis. For more information about Med Supp Market Data, please visit our website or
call 724.338.4100.
About Mark Farrah Associates (MFA)
Mark Farrah Associates (MFA) is a leading data
aggregator and publisher providing health plan market data and analysis tools
for the healthcare industry. Our product portfolio includes Health
Coverage Portal™, County Health Coverage™, Medicare Business Online™, Medicare
Benefits Analyzer™, and Health Plans USA™. For more information about
these products, refer to the informational videos and brochures available under
the Our Products section of the website or
call 724-338-4100.
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