Three national insurers continue to dominate the Medicare Advantage landscape. That should serve as a wake-up call to other carriers to act quickly if they want to close the gap. In fact, we see opportunities for plans that, among other things, target specific populations and enrich their product offerings.
That's just one of the trends we uncovered in an analysis of newly released enrollment data from the Centers for Medicare and Medicaid Services. While initial 2024 enrollment data was published in January, CMS’ February data release offers a cleaner look at the results. Total MA enrollment, including Special Needs Plans, hit 27.4 million people, accounting for 50.7% of the eligible Medicare population. That’s up from 48.4% eligible beneficiaries last year. Concerns around reimbursement rates and product pressures in the prior bid cycle likely contributed to a lower compound annual growth rate — 7.3% versus 9.1% for the prior three years. Nonetheless, growth is still strong. This article spotlights five key observations on this year’s individual MA growth and implications for the upcoming bid cycle.
Aetna, Humana, UnitedHealthcare outpace the market
A refreshed product portfolio, complete with new supplemental benefits, helped Aetna lead the way among national chains in year-over-year enrollment growth. The CVS Health subsidiary added more than 600,000 lives, compared to about 475,000 lives each for UnitedHealthcare and Humana. Aetna’s growth represents a nearly 30% increase from 2023.
The big three now hold 56.9% market share, a slight uptick from the 54.9% market share at this time last year. At the aggregate level, share was ceded by Centene subsidiary Wellcare and Elevance, formerly known as Anthem. Most other carrier segments shown above held relatively constant.
The continued consolidation of membership by national chains adds pressure to regionals and smaller plans which typically lack the scale, purpose-built capabilities, and ability to exercise service area levers to arbitrage business performance based on county-level dynamics.
Still, we saw notable membership gains within some of the segments, including Devoted Healthcare, which added more than 75,000 lives, a 65% increase from 2023. Devoted found success by expanding its purpose-built MA model to more than 100 additional counties in 2024. Alignment Healthcare leveraged its purpose-built MA model and enhanced technology platform to achieve a 65% spike in membership as well, adding over 60,000 lives to their book.
Highest growth seen in markets with 20-50% penetration
The sweet spot for continued growth appears to be in counties where between 20% and 50% of beneficiaries are enrolled in a MA plan. There has been a flattening and a slight right-shift of this curve in recent years, reflecting the fact that high penetration counties are not tapping out entirely from a growth perspective. Aitkin, Minn., is a prime example of what’s possible. Located about 125 miles north of the Twin Cities, Aitkin saw its penetration rate hit 88.3% in February 2024, up from 85.7% during the same time last year. These numbers make Aitkin the most highly penetrated county in both 2023 and, so far, 2024. They also demonstrate that growth is still possible in high penetration markets.
While there are slower penetration increases in the top and bottom bands — less than 20% and greater than 65% — we anticipate the market continuing to progress toward the more than 60% MA penetration bands in coming years.
SNP membership is growing
Over one million net new SNP members entered MA products in 2024. Considering the relative size of the SNP market versus non-SNP, this makes a pronounced difference in average percentage growth rates — SNP grew by about 19% compared to non-SNP which grew by about 4%, adding 845,000 members.
Interestingly, dual eligible special needs plans — D-SNP — added about 835,000 members, nearly the same net growth as in the total individual non-SNP market. D-SNP now accounts for roughly one-fifth of the total individual MA market. This growth trend is expected to continue with the phase out of Medicare Medicaid Plans and the remaining 285,000 covered lives transitioning to D-SNP over the next two years. Given the push by regulators for greater D-SNP integration, as well as the improved care model and profit potential, this distribution of membership and associated strategies around membership conversion will be interesting to watch in coming years.
Product richness continued to increase along several key buying dimensions
After years of steady increases of individual MA products with low premiums and rich benefits, plans took a more conservative approach in 2024. The most notable increase in prevalence from 2023 to 2024 was for $0 primary care provider copays — more than 86% of all individual, non-SNP products now offer $0 PCP co-pays. That’s not surprising given the value that a strong relationship between a member and their PCP drives in terms of health outcomes, medical costs, Stars performance, and risk adjustment accuracy. Dental coverage also continued to increase at a steady clip and is now essentially table stakes with 97% of plans offering it. The prevalence of Part B premium buyback plans rose, too. However, for the first time in years, the number of plans with several other shoppable core and supplemental benefits stabilized, including over-the-counter coverage (85%) and $0 Part D deductibles (66%). This trend reflects the financial headwinds MA plans faced in 2024, and that will intensify in 2025.
Membership is concentrated in the products with these key benefits
While the prevalence of plans with $0 premiums and rich core and supplemental benefits stabilized overall in 2024, these plans continue to capture a disproportionate share of MA membership. For example, roughly 51% of plans offer a $0 premium in 2024, however nearly 64% of members are enrolled in such plans. Similarly, while 66% of plans offer a $0 Part D deductible, nearly 78% of members have selected one of these plans. The one key exception to this trend is for Part B premium buybacks, given their pervasiveness in the relatively small MA-only market. Overall, MA beneficiaries continue to favor plans that offer outsized value relative to both traditional Medicare and other MA plans.
Roughly 10,000 boomers age into Medicare every day, a threshold that will continue until 2030 when the youngest of that generation will turn 65. This continues to be great news for carriers and represents significant continued growth opportunity. However, increasing policy and payment uncertainty we see around Medicare Advantage is going to require a change in bid strategy.
Setting sights on 2025
The playbook utilized over the last few years where carriers mainly focused on reinvesting in product year-over-year, driving continued growth across the market seems to be running out of runway. Instead, these program pressures will require tradeoffs across margin and growth. How exactly carriers prioritize these two things, and what this will mean for 2025 benefit packages and aggregate market growth will depend on carrier-level operational, performance, and strategic choices. The results will be interesting. In the meantime, carriers will enter a highly uncertain bid cycle and need to be bold in their assessment of potential market outcomes, views of long-term market trajectory, emphasis on operational performance, and ultimately, benefit decisions for 2025.
