by Richard Hamer and Michael Blix 18-Apr-2022
Medicare
Advantage's Golden Age
From 2021 to 2022,
Medicare Advantage enrollment grew 9% and the program now accounts for 48% of
all seniors on Medicare. If the rate of growth continues, by 2030 Medicare Advantage will serve 70% of the Medicare population.
A frequently stated
explanation for MA's growth is related to the new menu of supplemental
benefits. Supplemental benefits have appealed to several groups.
For age-ins who may not have urgent needs for health services, over-the-counter
drug benefits, and complementary medicine have encouraged MA enrollment.
For similar reasons and because broad PPO networks with out of network benefits
are now commonly available, late-to-Medicare seniors have also begun joining MA
plans more frequently.
Special programs such as
Special Supplemental Benefits for Chronically Ill (SSBCI) also make a
contribution to MA's overall trajectory. For example, as a program,
SSBCI has shown particularly strong growth. Between 2020 and
2022, enrollment in SSBCI plans grew by 3.3 million. Evidence of the
attractiveness of this business is shown by the growth of plans offer these
benefits. Today 23% of MA plans offer at least one SSBCI, up from 6% two
years ago.
Competition within
markets is also part of the equation. Over the past six years the number
of MA plans offered per market has jumped from an average of 16 plans per
county to 29. Within these crowded markets competitive marketing,
advertising, and agent outreach has left few consumers without an opportunity
to consider the MA program.
Enhanced benefit design
and intensifying competition have pushed MA enrollment into a trajectory that
appears to have momentum into the next decade. Health plan marketers are
using every tool to find and enroll the last possible person.
Medsupp's
steady erosion
The proportion of MedSupp
beneficiaries who switch to MA during the fall Annual Election Periods (AEP's)
been a small but steady source of new MA enrollees. During the 2022 AEP,
Deft Research's Medicare Shopping and Switching Study found that an
estimated 2.6% of MedSupp customers switched to MA for 2022 or roughly 290,000
people. This is more than twice the number switching in the other
direction, or from MA to MedSupp.
MedSupp to MA switching
is largely accounted for by those who switch carriers when
moving to MA. And this number has grown significantly in the past
four years. For 2022, just under 2% of MedSupp respondents indicated
changing insurers and picking an MA plan, compared to about 1% in 2019.
The upshot: few MedSupp members keep their insurers when moving to MA.
The carrier switching
phenomenon may indicate that a significant event such as the death of a spouse,
change in financial status or residence, appearance of a caregiver on the
scene, or the development of overall dissatisfaction with the insurance company
must occur before the former MedSupp beneficiary is released emotionally from
their loyalties and energized to find something new.
Conclusion
Medicare Advantage
enrollment growth continues to have momentum because its benefit package has
many appealing features -- supplemental benefits being the one emphasized here,
but premium, combined medical and drug coverage, broad PPO networks, dental and
vision benefits, all combine for effect. Enrollment growth is also propelled
by the effective marketing resources being put into play.
Research has shown that
MedSupp consumers are most concerned with access to medical services and
pharmaceuticals and that they distrust network-based MA plans. In order
for MedSupp beneficiaries to consider an MA plan, the network has to be
addressed. Broad PPO's are essential for the consideration to move
forward.
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