CMS recently released the September 2012 enrollment figures and market data on Medicare Advantage (MA) offerings for 2013, and the numbers show a program that’s stronger than ever and defying all predictions. It’s proof that this industry is capable of adapting to the new market conditions brought by the Affordable Care Act.
CMS says Medicare Advantage will grow by around 1.24 million members in 2012: individual Medicare enrollment has grown almost 800,000 lives this year, while group employer plan membership is up 200,000 lives. Special needs plan (SNP) enrollment is up nearly 100,000 lives. These are astounding figures for a program most on Capitol Hill thought would be in its death throes by now.
CMS estimates average member premiums will increase by 4.7% while MA enrollment is projected to grow by 11% — or roughly another 1.5 million — in 2013. MA plans will offer nearly 43,200 distinct MA product offerings and nearly 11,900 SNP offerings in 2013; the industry clearly remains heavily committed to MA despite a cloudy rate outlook with the ACA’s payment cuts beginning to be felt next year. 32% of MA/SNP products are zero-premium in 2013 — exactly in line with the 2012 ratio.
Humana will again offer the most MA/SNP plans (12,125) for the 2013 MA plan year, again dominating the Medicare market with over 22% of the entire MA/SNP market in 2013. Humana continues its expansion with increased network-based HMO and PPO products by nearly 16%.
Overall HMO/PPO products expanded by 21% for 2013. PPO products will account for 63% of Humana’s product portfolio in 2013. United Healthcare expanded its product offerings by nearly 250% to 10,155 distinct products in 2013 from 2,939 in 2012. This growth was largely driven by the acquisition of XL Health and its vast SNP product portfolio earlier this year. Of the other major Medicare players, WellCare and United will offer the highest mix of zero premium non-SNP MA plans at 90% and 86%, respectively.
MA plans are also extraordinarily positioned for the migration of some 9 Million dual eligibles that will begin transitioning to plans in 2013. The number of Special Needs Plans (SNPs) available will increase by 61% in 2013 to 11,881, rapidly outpacing the 21% growth rate in 2012. United’s SNP product portfolio is expanding by over 800% due to its acquisition of XL Health, and is now the leading SNP carrier in the market by a wide margin.
CMS expects 11% enrollment growth, so the MA market will continue to grow as a percentage of overall industry revenue in 2013. The average MA member premium rate increase of 4.7% should also provide some offset to weak-to-falling rates from CMS as the ACA cuts take effect. However, overall pricing in MA will remain muted and Medicare cost trends are creeping up slightly – so MA margins will likely compress in 2013, an indication that plans will trade margin for membership as the ACA cuts become the norm over the next few years.
Anyway you look at it Medicare Advantage is thriving and a resounding success – and provides the best blueprint going for reform — both of Medicare itself, and the health system more generally as the ACA is implemented in 2014.