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Report finds Medicare Advantage grew more than at any time in history, again

A report detailed how Medicare Advantage grew again, gaining some of its numbers from new members and poaching others from Original Medicare, which is declining overall.

Medicare is well on its way to the tipping point of reaching 50% enrollment by 2025, an anticipated benchmark, though that benchmark is mostly symbolic in significance. A report broke Medicare’s recent progress down by numbers and found that the Medicare Advantage program grew yet another year in a row and now has 28 million participants, accounting for 45% of all Medicare beneficiaries. Based on the results of the report, Medicare Advantage products have a strong value proposition. Several key findings emerged.

This year, Medicare enrollment overall grew, with more than 1 million joining Medicare programs. However, though positive overall, the growth has slowed compared with past years, a trend which the report attributes to Covid-19 deaths among the 65+ demographic.

Additionally, the report found Medicare Advantage gained 2.3 million lives, but did so by poaching a number of Original Medicare lives. Such a jump from Original to Advantage has never happened at such numbers before, according to the report. Presently Medicare Advantage accounts for 45% of all Medicare enrollment compared to only 42% in 2021 and just 37% in 2019.

“There are two tailwinds at play here. The first is simply that the 65+ population continues to grow more quickly than any other age cohort. The second is that Medicare Advantage plans enjoy the lion’s share of that growth,” said Nick Herro, a Principal with The Chartis Group and a leader in the firm’s Private Equity Advisory Practice, in an email discussing the report’s findings.

However, while Medicare Advantage grew this past year as did overall Medicare enrollment, Original Medicare declined. People are dropping from Original Medicare at a steady rate: the program shrank by 0.4 million in 2019-2020, by 1 million in 2020-2021, and now by 1.3 million in 2021-2022.

“Growth hides all sins. Though many plans are seeing membership growth, if they are not capturing membership at the market rate (nationally 9%) then they are losing,” commented Herro. “As we noted in the report, this is particularly true with non-profit and Blues plans who continue to cede share to for-profit plans despite seeing membership growth. Health plans really need to double down on growing their Medicare Advantage presence. This population is uniquely valuable for so many reasons, but so few plans are seeing success in maintaining, much less growing, their presence in this market.”

In terms of plans, the report found most people turn to for-profit health plans as opposed to nonprofit or Blue-branded nonprofit options. In percentages, 71.8% chose for-profit plans while 18.2% picked nonprofit and 10% selected Blue-branded nonprofits.

Two groups in particular saw growth, the first being Special Needs Plans. They grew 20% this year and enrolled 4.5 million lives. Further, startup health plans also increased, grabbing 1.3% of the total market.

“For the majority of health plans, the most important takeaway [from the report] has to be the continued share erosion to a select few for-profit and ‘startup’ health plans. This is a continued and accelerated theme from last year’s report,” said Herro.

Based on the findings, the report offered a few predictions. For one, it anticipates that by 2025, 50% or more of all Medicare enrollees will select to have a Medicare Advantage program. Second, startup plans will see continued growth and interest.

“For healthcare services organizations and the investors in those businesses, this report should validate and further encourage their shift into value-based care,” Herro said. “The MA market continues its rapid growth, and the competitive landscape is shifting favorably in many high-focus states. From a policymaker standpoint, the shift from Original Medicare to Medicare Advantage really turns up the volume on the dialogue surrounding the program.”

Photo: designer491, Getty Images; graphs: The Chartis Group