Medicare Advantage (MA) enrollment has nearly doubled over the past decade, and it is showing no signs of slowing down. Indeed, a new report from L.E.K. Consulting finds that MA penetration will continue to rise as high as 70 percent between 2030 and 2040.
Health plans must prepare now for a future in which MA is the main Medicare product offering, according to L.E.K. Consulting’s latest Executive Insights report.
The program continues to grow in popularity among consumers, health plans, and lawmakers from both sides of the aisle. Although there has been some question on how much MA plans actually lower Medicare spending, L.E.K. notes that MA is one of the few products in the United States health care system that meets the goals of the Triple Aim—to provide better care, improve population health, and lower costs. Consumers like that the program offers additional benefits and care coordination; health plans like that it earns them more money; and the government is focusing on MA as a key component of long-term cost containment.
MA has grown at a slow but steady pace over the past 25 years, but the Centers for Medicare & Medicaid Services (CMS) projects enrollment to reach an all-time high this year with 22.6 million Medicare beneficiaries. It won’t end there. L.E.K. expects the program will reach a 47 percent penetration (or more than 37 million members) by 2025, and it will hit 70 percent penetration at some point between 2030 and 2040.
“As seniors increasingly eschew Original Medicare in favor of lower payments, enhanced care management and more cost certainty, with encouragement from both health plans and, albeit indirectly, the government, we expect that growth to continue,” L.E.K. said in the report.
MA will likely become more popular as health care costs continue to increase, and seniors with Original Medicare will find it harder to meet their 20 percent coinsurance responsibility, the report noted. Seniors that have multiple age-related chronic conditions will probably turn to MA plans for the care management services they provide. In addition, the report expects to see a growth in MA enrollment from dual eligibles, Medicare beneficiaries who also receive Medicaid assistance, as states move to manage the cost of the high-needs patient population.
Eventually, L.E.K states, MA will be the main Medicare product offering. Therefore, health plans must act now to grow their market share of MA offerings, according to the report. “That could include expanding into new counties, investing in targeted sales to age-ins, and designing new products to attract new members and keep them healthy.”
However, there are two regulatory uncertainties that could negatively change the global management consulting firm’s outlook for MA enrollment and penetration: proposals for Medicare for All and the Primary Cares Initiative, a voluntary payment model recently announced by CMS that supports the delivery of advanced primary care. The single payer proposal potentially could end private health insurers’ involvement in Medicare and Medicare Advantage, according to the report. The Primary Cares Initiative could lead to an increase in care management within Original Medicare and diminish incentives to join an MA plan.