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January 18, 2019

Growth in MA plan signups slowed in 2019, CMS data show

Daily Briefing

    Read Advisory Board's take: Why health plans faced challenges advertising new benefit types

    Signups for Medicare Advantage (MA) plans increased by 6.8% from January 2018 to January 2019, according to preliminary CMS data.

    MA's open enrollment period for the 2019 coverage year ran from Oct. 15, 2018, to Dec. 7, 2018, though CNBC reports that Medicare beneficiaries will have another chance to enroll in MA plans during a limited open enrollment period from Jan. 1 to March 31. CMS' preliminary data does not capture all of the signups that occurred during the open enrollment period, Modern Healthcare reports. As such, the total number of signups for MA plans is expected to be higher when CMS releases completed signup data in February.

    More than 22M individuals enrolled in MA plans, data show

    The preliminary data show a total of 22.4 million U.S. residents signed up for 2019 MA plans as of January—up by 1.4 million when compared with the total number of individuals who had enrolled in 2018 MA plans by January 2018.

    According to Modern Healthcare, MA signups from January 2018 to January 2019 grew at a slower pace when compared with previous years. For example, total MA plan signups grew by more than 1.5 million in both 2016 and 2017, Modern Healthcare reports.

    Despite the slower growth in signups, several MA insurers increased their market shares as more individuals selected their MA plans for 2019, according to Modern Healthcare. Approximately 50% of all beneficiaries signed up for MA plans offered by three companies:

    • UnitedHealthcare, which has about 5.7 million individuals signed up for its 2019 MA plans, compared with about 5.2 million in 2018;
    • Humana, which has nearly 3.9 million individuals signed up for its MA plans, compared with about 3.5 million in 2018; and
    • Aetna (which recently merged with CVS Health), which has nearly 2.2 million individuals signed up for its MA plans, compared with about 1.7 million in 2018.

    Daily Briefing is published by Advisory Board, a division of Optum, which is a wholly owned subsidiary of UnitedHealth Group. UnitedHealth Group separately owns UnitedHealthcare.

    According to Modern Healthcare, the insurers that experienced the fastest growth in MA plan signups were:

    • Anthem, which saw signups grow by 53% from January 2018 to January 2019, reaching about 1.1 million; and
    • Aetna (which recently merged with CVS Health), which saw enrollment grow by 26.7% from January 2018 to January 2019—driven by Aetna's expansion into about 360 counties, according to Barclays equity analyst Steve Valiquette.

    Some had predicted more significant growth

    Some observers had expected enrollment MA plan signups to grow more over the past year, Modern Healthcare reports.

    Jeff Fox—president of Gorman Health Group, which offers technology and other services to MA plans—said he had expected MA plans to see double-digit signup growth as a result of heavy marketing from MA plans and certain changes implemented under the Trump administration. For example, CMS implemented a 3.4% payment rate increase for MA plans and granted plans new flexibility to offer supplemental benefits—such as transportation and in-home care—to MA beneficiaries. Fox said, "The formula was there: health plans were aggressive, they got nice rate increases, the rules around benefit design relaxed a little bit."

    However, Fox said the midterm elections might have distracted individuals and kept them from signing up for MA plans (Livingston, Modern Healthcare, 1/16; Baker, "Vitals," Axios, 1/16; Vernon, CNBC News, 1/11).

    Advisory Board's take

    Rachel Sokol, Practice Manager, Health Plan Advisory Council and Sandra Agik, Senior Analyst, Health Plan Advisory Council

    The slowing growth in enrollment this year likely reflects—at least in part—one fact: Despite plans' newfound flexibility to change their benefits and make them stand out to members, they still face a number of challenges in turning that potential into reality.

    First, CMS' announcement redefining health-related supplemental benefits to include services that increase health and improve quality of life came out last April—only a few months before the product filing deadline in June. Many plans simply did not have time to prepare products with innovative and attractive new features for their beneficiaries.

    “Less than 40% of plans offered at least one of the new benefits”

    Our own analysis of this year's benefits offerings data shows that less than 40% of plans offered at least one of the new benefits—with Nicotine Replacement Therapy being the most frequently offered. National plans like Anthem and Aetna offered products with the most diverse range of supplemental benefits. But most plans tell us that they wanted to be cautious about offering new benefits as they were unsure which benefits members would care about or which would improve health outcomes.

    Also, given CMS' restrictions on plans using these benefits for marketing, plans haven't yet figured out how best to share benefit information with members and, ultimately, help them select the most appropriate product. Since those extra benefits only apply to a select few members, plans are hesitant to include this information in their general marketing—making it hard to find as seniors shop for products.

    So far, we're seeing more activity with new supplemental benefits in counties where MA penetration is low, so plans are pushing them to win over traditional Medicare enrollees. But we expect to see more plans offering products with innovative supplemental benefit offerings come 2020. Plans can't continue to differentiate on price and medical coverage alone: The average Medicare beneficiary has access to 24 plan products—a majority of which are already HMO and zero-premium plans.

    To learn more about the CMS' benefit changes—and the five key implications for your MA business—view our expert insight here.

    Read the Insight

    Still looking for more data and insights on MA? Our team is currently researching how MA plans are adjusting their strategy to attract consumers while keeping up with regulatory changes. One early finding: We've heard from plans that a big opportunity lies with guiding appropriate product selection.

    Hear our findings and share your thoughts with our experts

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