Health care experts widely expected the Affordable Care Act to hobble Medicare Advantage, the government-funded private health plans that countless seniors have selected instead of original Medicare.
To purchase expanding coverage to the uninsured, this years law cut vast amounts of dollars in federal payments towards the plans. Government budget analysts predicted that would result in a sharp stop by enrollment as insurers reduced benefits, exited states or left the business altogether.
But the dire projections proved wrong.
Since 2010, enrollment in Medicare Advantage has doubled to more than 20 million enrollees, growing from a quarter of Medicare beneficiaries to greater than a third.
“The Affordable Care Act didn't kill Medicare Advantage, and the program looks poised to carry on to grow quite rapidly,” said Bill Frack, md with L.E.K. Consulting, which advises health companies.
And as beneficiaries get set to buy plans during open enrollment – which runs from Monday through Dec. 7 – they will look for a greater choice of insurers.
Fourteen new companies have started selling Medicare Advantage plans for 2021, several greater than a typical year, according to a report out Monday from the Kaiser Family Foundation. (KHN is definitely an editorially independent part of the foundation.)
Overall, Medicare beneficiaries can choose from about 3,700 plans for 2021, or 600 a lot more than this year, based on the federal government's Centers for Medicare & Medicaid Services.
CMS expects Medicare Advantage enrollment to jump to nearly 23 million people in 2021, a 12 percent increase. Enrollees shopping for new plans this fall will probably find lower or no premiums and improved benefits, CMS officials say.
With about 10,000 seniors aging into Medicare range every day, the overall view of the insurance industry, said Robert Berenson, a Medicare expert with the nonpartisan Urban Institute, “is that their future is Medicare and it is crazy to not pursue Medicare enrollees more actively.”
Bright Health, Clover Health insurance and Devoted Health, all for-profit companies, began offering Medicare Advantage plans for 2021 or is going to do so for 2021.
Mutual of Omaha, a company owned by its policyholders, can also be getting into Medicare Advantage for the first time in two decades, providing plans in Dallas and Cincinnati.
Some nonprofit hospitals are offering Medicare plans for the first time too, such as the BayCare Health system in the Tampa, Fla., area.
While Medicare beneficiaries in most counties possess a selection of several plans, enrollment for years had been consolidated into several for-profit companies, primarily UnitedHealthcare, Humana and Aetna, that have accumulated just under half the nation's enrollment.
These insurance giants are also expanding into untouched markets for next year. Humana in 2021 will offer its Medicare HMO in 97 new counties in 14 states. UnitedHealthcare is moving into 130 new counties in 13 states, including the very first time Minnesota, its headquarters for the past four decades.
Seniors have always been attracted to Advantage plans because they can lead you to benefits unavailable with government-run Medicare, such as vision and dental coverage. Many private plans save seniors money as their premiums, deductibles along with other patient cost sharing are less than what beneficiaries pay with original Medicare. But there is a trade-off: The private plans usually require seniors to use a restricted network of doctors and hospitals.
The authorities pays the intends to provide coverage for beneficiaries. When drafting the ACA, Democratic lawmakers targeted the Medicare Advantage plans because studies had shown that enrollees in the private plans cost the federal government 14 percent a lot more than individuals the initial program.
Medicare plans weathered the billions in funding cuts in part by qualifying for brand new federal bonus payments open to those that score a “4” or better on a five-notch scale of quality and client satisfaction.
Health plans also gained extra revenue by identifying illnesses and health risks of members that will entitle the companies to federal “risk-adjustment” payments. That has provided countless billions in extra dollars to Medicare plans, though congressional analysts and federal investigators have risen concerns about insurers exaggerating how sick their visitors are.
A study last year found that those risk adjustments could increase the than $200 billion to the price of Medicare Advantage plans within the next decade, despite no alternation in enrollees' health.
For-profit Medicare Advantage insurers made a Five percent profit margin in 2021 – twice the typical of Medicare plans overall, based on the Medicare Payment Advisory Commission, which reports to Congress. That's slightly better than the insurance industry's overall 4 % margin reported by Standard & Poor's.
Those profit margins could expand. The Trump administration boosted payments to Medicare Advantage plans by 3.4 % for 2021, 0.45 percentage points higher than the 2021 increase.
Betsy Seals, chief consulting officer for Gorman Health Group, a Washington company that advises Medicare Advantage plans, said many health plans hesitated to go in that market or expand after President Mr . trump was elected simply because they weren't sure the new administration would support the program. But such concerns were erased using the announcement on 2021 reimbursement rates.
“The administration's support from the Medicare Advantage program is apparent,” Seals said. “We have seen the downstream impact of the support with new entrants towards the market – a trend we anticipate seeing continue.”
Getting Customers to Switch
Since the 1960s, Mutual of Omaha who has sold Medicare supplemental insurance policies – coverage to help beneficiaries in government-run Medicare spend the money for part of costs that program doesn't get. However the company only briefly entered the Medicare Advantage business once – in the home state of Nebraska in the 1990s.
“In the past Ten or twenty years it never seemed quite the best time,” said Amber Rinehart, a senior vice president for the insurer. “The main hindrance was round the political environment and funding for Medicare Advantage.”
Yet after watching Medicare Advantage enrollment soar and government funding increase, the insurer has decided now is the time to do something. “We have seen much more stability of funding and the political tailwinds are there,” she said.
One challenge for the new insurers will be attracting members from existing companies since beneficiaries tend to stick with the same insurer for many years.
Vivek Garipalli, CEO of Clover Health, said his San Francisco-based company hopes to gain members by providing low-cost plans having a variety of hospitals and doctors and allowing members to see specialists in its network without prior approval from their doctor. The company can also be focused on attractive to blacks and Hispanics who've been less likely to become listed on Medicare Advantage.
“We see a lot of opportunity in markets where there are underserved populations,” Garipalli said.
Clover has gotten funding from Alphabet Inc., parents company of Google. Clover sold Medicare plans in New Jersey this past year and it is expanding for 2021 into El Paso, Texas; Nashville, Tenn.; and Savannah, Ga.
Newton, Mass.-based Devoted Health is getting into Medicare Advantage with plans in Florida and Central Florida. Minneapolis-based BrightHealth is expanding into several untouched markets including Phoenix, Nashville, Cincinnati and Nyc.
BayCare, based in Clearwater, Fla., is providing a Medicare arrange for the first time in 2021.
“We think there's enough share of the market to be had and we're not afraid to compete,” said Jim Beermann, v . p . of insurance strategy for BayCare.
Hospitals are drawn to the Medicare business since it provides them access to much more of premium dollars directed to health costs, said Frack of L.E.K. Consulting. “You control much more of your destiny,” he added.