After factoring the simultaneous decline in Cost plan enrollment as well as membership gains with a newer form of coverage called Medicare Advantage, the three carriers in March were left with a smaller share of the Medicare market than they held in December.
Even so, analysts said it’s notable how many people opted for the supplemental policies, often called Medigap plans, since relatively few seniors in a typical year jump from Medicare health plans back to the original government program.
“The numbers are striking and much larger than we’ve observed in the past at the national level,” said
About 1 million Minnesotans get health insurance though the federal Medicare program. Over the years, seniors here have opted to receive their benefits through one of three primary channels -- Cost plans, Advantage plans and the original Medicare program.
Across the country, a growing share of seniors have been selecting Medicare Advantage, where government benefits are delivered through private managed-care companies. Original Medicare remains the option for most seniors, but there has been a shrinking market share for the program, where many consumers buy Medigap policies to reduce their out-of-pockets costs.
Many health insurers sell both Medicare Advantage and Medigap policies, but they are much more interested in selling Advantage plans, said
“The primary reason is that the premium per-member, per-month is a lot higher in a Medicare Advantage product than in a Medigap,” Windley said. “The second point would be, the ability to influence consumption is a lot higher in Medicare Advantage.”
With Medigap coverage, he said, “the ability to have any influence on reducing consumption in a way that would improve the margin in that product is almost nil.”
Growth in Medicare Advantage has been harder to watch in
Last year, about 400,000 people in
For 2019, more than 300,000 people with Cost plans in
Of those who had to make a change in
“The market for Medicare plans is today a smaller market than it was a year ago,” said
Cost plans in
Put the numbers together and
Over the past five years, Medicare health plans were the single-largest source of operating income at
To adapt to the Medicare shift,
Medigap policies and Advantage plans represent new lines of business for Medica, said
Insurers see more revenue per enrollee with Medicare Advantage because they are responsible for covering both outpatient benefits (Medicare Part B) as well as hospital services (Part A), Lindquist said, whereas Cost plans aren’t the primary payer for Part A benefits. The increased responsibility means insurers must work closely with health care providers to manage care, Lindquist said. That includes making sure patient health conditions are properly documented, he said.
Medicare Advantage plans receive payments on a per-member, per-month basis from the government, and those payments can be adjusted upward for patients with more health problems.
“You want to make sure the senior that you’re treating is identified with all the conditions they have, so that you’re paid the appropriate revenue from [the federal government],” Lindquist said.
On the Medigap side, insurers collect much less per capita premium revenue, Lindquist said, but they are spared the work of determining whether claims from doctors and hospitals are eligible for payment. That work is done by the federal government. Medigap insurers, however, make assessments about the risk of potential enrollees.
Whether it’s Medigap, a Cost plan or an Advantage plan, “each one requires you to do something a little bit differently in order to be successful with it,” Lindquist said. “The revenue changes, but what you have to do with each product changes, too.”
Medica is adapting to the Cost plan shift not only by offering the Medicare alternatives, but also by growing its business in states outside
“We see this evolution in Medicare as a multiyear process,” the insurer said in a statement. “We’re also growing our health plan into new markets including
If the insurers that sold Cost plans lost business, where did enrollees go?
He said the growth at Humana and UCare was “impressive.”
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