Medicare is heading towards the tipping point of reaching 50% enrollment by 2025, an expected benchmark, albeit largely symbolic.A sort of Report Breaking down Medicare’s recent progress by the numbers finds that Medicare Advantage plans have grown for a year in a row and now have 28 million participants, or 45% of all Medicare beneficiaries. According to the reported results, Medicare Advantage products have a strong value proposition. Several key findings emerged.
This year, Medicare enrollment has grown overall, with more than 1 million people enrolled in the Medicare program. However, while generally positive, growth has slowed compared to the past few years, a trend the report attributes to Covid-19 deaths in the over-65 population.
Additionally, the report found that Medicare Advantage gained 2.3 million lives, but did so by poaching some of the original Medicare lives. The jump from Original to Advantage has never happened before in numbers like this, the report said. Medicare Advantage currently accounts for 45% of all Medicare enrollments, up from 42% in 2021 and 37% in 2019.
“There are two tailwinds at work here. The first is that the over-65 population continues to grow faster than any other age group. The second is that Medicare Advantage plans have the lion’s share of the growth,” said Nick Herrothe head of Chartis Group and the firm’s private equity advisory practice, in an email discussing the report’s findings.
However, while Medicare Advantage has grown over the past year as overall Medicare enrollment has grown, Original Medicare has declined. Original Medicare numbers are steadily declining: the plan lost 400,000 in 2019-2020, 1 million in 2020-2021, and now 1.3 million in 2021-2022.
“Growth covers all evil. While many programs are growing membership, if they’re not getting membership at the market rate (9% nationwide), they’re losing,” commented Herro. “As we noted in our report, this is especially true for nonprofits and Blues plans, which continue to cede share to for-profit plans despite membership growth. Health plans really need to double down on expanding their Medicare Advantage coverage. Impact. This demographic is uniquely valuable for many reasons, but few programs have been able to successfully sustain, let alone grow, their presence in this market.”
On the plan side, the report found that most people turn to for-profit health plans rather than nonprofit or blue-branded nonprofit options. In percentage terms, 71.8% chose for-profit programs, 18.2% chose nonprofits, and 10% chose Blue branded nonprofits.
Two groups in particular saw growth, the first being special needs programs. They have grown 20% this year, with 4.5 million registered. In addition, entrepreneurial wellness plans have also increased, capturing 1.3% of the overall market.
“The most important point for most health plans is [from the report] It must be the continued share erosion of a handful of for-profit and “start-up” health plans. This is a continuing and accelerating theme of last year’s report,” Herro said.
Based on the findings, the report offers some predictions. On the one hand, it expects that by 2025, 50% or more of Medicare enrollees will choose to enroll in a Medicare Advantage plan. Second, entrepreneurship programs will see continued growth and interest.
“For healthcare delivery organizations and investors in these businesses, this report should validate and further encourage their shift to value-based care,” Herro said. “The MA market continues to grow rapidly, and the competitive landscape is changing favorably in many high-profile states. From a policy maker’s perspective, the shift from original Medicare to Medicare Advantage has really raised the volume of the conversation around the program. “
Photos: designer491, Getty Images; Graphics: Chartis Group
