Gross margins per enrollee in the Medicare Advantage market for insurers had returned to pre-pandemic levels by the end of 2021, while individual and group markets notched lower margins compared to before the outbreak, according to a report by the Kaiser Family Foundation.
The analysis of insurer markets in 2021, the latest year of available annual data, sheds light into the varied financial performance of insurers during the COVID-19 pandemic, when use of health services plummeted and elective procedures were canceled or postponed.
Margins for Medicare Advantage, or MA plans, had returned to pre-pandemic levels in 2021 and were more than double those seen in group, individual and MCO markets.

Through the end of 2021, MA gross margins averaged at $1,730 per enrollee, according to the report, a decrease from the 2020 height of an average gross margin of $2,257 but similar to 2018 levels.
Enrollment in MA plans has grown over the past decades — as much as 337% from 2006 through 2022, according to one report — with enrollment potentially boosted by strong financial returns for MA insurers. More than 50% of eligible beneficiaries are expected to enroll in MA plans this year, according to KFF, and large insurance operators like CVS Health have made recent inroads into the MA market with acquisitions.
Still, MA plans also have drawn controversy amid potentially billions of dollars in overpayments from the federal government. In January, the CMS announced that it would begin to try to collect on those overpayments issued as far back as 2018 in a final rule.
However, average gross margins for Medicaid managed care market, or MCO plans, surpassed pre-pandemic levels, according to the KFF analysis. The report found that 2021 earnings results for the largest MCO for-profit firms showed continued year-over-year growth in enrollment.
While MA plans and MCOs recovered or surpassed pre-pandemic levels, individual and group plans fell in 2021. Individual market and group plan margins were down 36% and 17%, respectively, in 2021 compared to 2019 levels.
The KFF analysis also analyzed medical loss ratios, finding that loss ratios in 2021 were similar across all surveyed markets.

Researchers found that medical loss ratios in the MCO market remained lower relative to 2019 levels, while loss ratios were higher in group and MA markets.
Still, individual market medical loss ratios were “substantially higher” in 2021 compared to pre-pandemic levels, according to the analysis.
For the report, the Kaiser Family Foundation analyzed data reported by insurance companies to the National Association of Insurance Commissioners and compiled by Mark Farrah Associates in Managed MCOs, individual, group and Medicare Advantage markets.