As enrollment in Medicare Advantage (MA) plans continues to grow, health insurance companies are expected to expand their MA business segments—at rates faster than their traditional Medicare business lines, according to a recent HealthEdge report.
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Enrollment in MA plans is growing, data show
MA plan enrollment has skyrocketed in recent years in part because of the increasing number of baby boomers aging into Medicare. For instance, a recent report by the software company HealthEdge stated that 22 million Medicare beneficiaries, or 34% of the total Medicare population, in 2019 selected an MA plan over a traditional Medicare fee-for-service plan—up from 6.9 million, or 18% of the total Medicare population, in 1999:
Insurers expect to grow MA business segments
As such, insurers are taking steps to expand their MA business segments. The HealthEdge report, which is based on a survey of 201 insurance executives who work with Medicare and MA plans, found more than 90% of insurance executives said they plan to grow their MA business segments faster than their traditional Medicare business lines.
According to Axios' "Vitals," several insurers already are reporting big enrollment gains in individual or employer-sponsored MA plans.
For example, insurers' Q2 earnings reports showed that MA plan sign ups increased by:
- 25%, reaching 1.2 million, for Anthem, in part because Anthem acquired an MA firm;
- 14%, reaching four million, for Humana; and
- 8%, reaching 5.2 million, for UnitedHealth Group.
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According to "Vitals," Cigna reported fewer MA sign ups in Q2 than other insurers, with 500,000 new enrollees. But Cigna executives said the insurer plans to increase its MA membership by 10% in 2020 and by as much as 15% annually by 2021.
HealthEdge CEO Steve Krupa said of MA, "It's going to become a super competitive market, where you don't have to hit that big of a critical mass number. If you have 10,000 to 20,000 members, you have a substantial revenue base."
The key challenge insurers face in MA market
According to the HealthEdge report, technology is one of the biggest challenges insurers face when expanding, optimizing, and refining their MA plans. The report noted that 40% of survey respondents said modernizing their technology ranked as the first- or second-most-important factor that would help them prepare for new Medicare beneficiaries.
Krupa said some insurers "may even be looking at tech before they enroll their first member." He explained, "People turning 65 today have been around for the smartphone revolution, the web revolution. Really what we're seeing is that you're going to have a much more sophisticated technical user as people age in" (Minemyer, FierceHealthcare, 8/1; Owens, "Vitals," Axios, 8/2; HealthEdge report, accessed 8/6).