Some smaller and startup Medicare Advantage firms were able to snap up more new members — dashing expectations for larger rivals, including Humana and Cigna — during the most recent annual enrollment period.
Despite recent robust growth in government insurance programs, Humana and Cigna executives said they expect weaker growth in their Medicare Advantage plans for 2022, during recent public remarks.
With a record number of MA plans available to seniors, many shopped their options during the latest annual enrollment period and it created a "retention issue," Humana CEO Bruce Broussard said Jan. 7 in public comments.
The amount of members jumping to new plans caused Humana, the nation's second largest MA player, to slash its forecast for how many members it expects to cover in 2022.
Cigna, too, said MA growth will be lower in 2022, according to CEO David Cordani's comments during the annual J.P. Morgan Healthcare Conference.
These forecasts do not signal a waning interest among seniors for the privatized plans. Instead, it seems some smaller rivals are luring away members from some of the nation's largest Medicare players, and capturing enrollment records of their own.
The crop of startup insurtechs saw sizable growth between 2021 and the start of the new year, according to CMS' monthly enrollment data categorized by MA contracts.
Among the insurtechs, Devoted Health and Clover Health saw some of the largest membership increases. Devoted more than doubled its membership. Clover Health saw a 25% increase in members comparing monthly enrollment of January 2021 with January 2022.
Insurtechs see growth in MA members
The apparent increase in shopping is noteworthy because prior research indicates MA members tend to be "fairly sticky" and stay with a plan once they've selected it, Tricia Neuman, executive director for Kaiser Family Foundation's program on Medicare policy, said. It's not to say that MA members never switch plans, they'll move if they sense there's a potential for meaningful savings, Neuman added.
"This means they may be particularly attentive to premiums because monthly premiums are relatively easy to compare, but not always a good proxy for out-of-pocket costs," Neuman said.
A new benefit may have caught shoppers attention this year, according to Sachin Jain, CEO of SCAN Health Plan, a nonprofit plan that has operated for more than four decades and is based in Long Beach, California.
The biggest driver of disruption in enrollment this year was the introduction of SCAN's plan with a Part B premium rebate, Jain said. Every month, members receive an additional $125 in their social security check as part of the rebate. Many SCAN Health plans have a zero dollar premium, Jain said.
It's not uncommon for MA plans to have a zero-dollar premium due to the financing mechanism of the program between MA firms and the government. In traditional MA plans, members typically still have to pay a Part B premium, which is usually deducted from their social security benefit. The standard Part B premium in 2022 is $170, according to the federal government, and a Part B premium rebate significantly reduces that premium amount.
Medicare Advantage, or Part C, is privatized Medicare coverage sold by some of the nation's largest insurers. The private MA plans bundle together Medicare services — hospital, doctor and drug coverage — all into one plan. In exchange, insurers receive a flat payment from the federal government for each member to take on the risk of insuring these seniors. Traditional fee-for-service Medicare pays providers for each service delivered.
SCAN captured more than 52,000 new members, a significant portion of which came from larger rivals. A quarter came from UnitedHealthcare, the nation's largest MA operator, Jain said.
As seniors are typically on fixed incomes, and the nation faces record inflation, "We thought one of the most important things we could do for seniors was actually put a few dollars back in their pockets," Jain said, noting his firm recorded recorded enrollment during the annual enrollment period.
"One of the most important social determinants of health that we don't actually acknowledge, is really disposable income," Jain said.
As MA firms compete for members, they've offered benefits outside of what some would expect of traditional insurance, such as gym memberships.
As a result, members have been accustomed to rich benefit design, and if those benefits get richer every year, "The more I think you train them on shopping every single year," said Mario Schlosser, CEO of Oscar Health, which also saw membership increases year over year.
On average, for 2022 coverage, seniors shopping for MA plans had access to 39 plan offerings, more than any other year prior, according to research from Kaiser Family Foundation.
"We've seen the average number of plans explode over the past several years," Neuman said, noting that the abundant plan offerings reflect the profitability in the MA business market.
But it isn't a good proxy for how much competition exists among insurers in any given market. While the average MA member has access to 39 plans, they have access to nine different firms selling those plans, KFF research found.
There are five counties in the U.S. that have 16 different insurers selling MA plans, the most compared to all other counties, signaling these are the most competitive markets, according to data compiled by KFF.
Most competitive Medicare Advantage markets in 2022
The MA market has grown considerably over the past decade as seniors opt for privatized plans over traditional Medicare. There are now more than 26 million seniors enrolled in MA, a figure that is only expected to grow.