Several new reports indicate the highs and lows in the Medicare Advantage space. Here’s what captured our attention:
Report: Challenges to MA led to $5.7B underwriting loss in 2024
Higher utilization since 2023 led to $5.7 billion underwriting loss for the Medicare Advantage line of business in 2024, following gains in at least the preceding five years, according to a new report by AM Best.
The special report notes that Medicare Advantage had been a reliable source of earnings for the U.S. health insurance industry, contributing to overall profitability. Underwriting gains from Medicare Advantage made up approximately 40 percent of underwriting gains from 2019 to 2022, but that decreased to 20 percent in 2023 before the 2024 underwriting loss. Overall, nearly three-quarters of companies with a concentration in Medicare Advantage business reported an underwriting loss for the line in 2024.
“Medicare Advantage enrollment and premium continue to grow as more people are aging into the program. However, plans have experienced an increase in utilization and medical trends that have persisted longer than expected,” said Jason Hopper, associate director, industry research and analytics for AM Best, in the report announcement. “Changes to the risk-adjustment payment model by the Center for Medicare & Medicaid Services, as well as lower Star ratings across the industry, also have contributed to recent underwriting losses.”
The report states that in 2025, the number of companies (aggregated by ultimate parent) that had contracts with Star ratings of four or higher had dropped by more than 25 percent when compared with 2022. The largest declines were seen among publicly traded and Blue Cross/Blue Shield companies.
“Profitability will most likely continue to be under pressure due to the following reasons: utilization and medical costs are up; medical inflation consistently outpaces the consumer price index; individuals are receiving more medical services, and some treatments are very expensive, such as gene therapy. AM Best expects health insurers to evaluate their position in the Medicare Advantage market for 2026,” said Bridget Maehr, director, AM Best, in the announcement.
RAND: Program to reduce insulin costs for Medicare beneficiaries cut spending, improved care
A three-year effort to reduce the cost of insulin for Medicare beneficiaries has achieved its primary goals, lowering out-of-pocket costs for the medication and increasing enrollees' regular use of insulin, according to a new report by RAND, a nonprofit research organization.
The program also decreased costs for the federal government, with drug manufacturers increasing rebate and coverage gap payments. But the program also had some unanticipated results, including increased drug insurance costs for Medicare beneficiaries who do not use insulin.
Researchers say that the report may aid policymakers as they consider further efforts to reduce prescription drug costs for people enrolled in Medicare.
“As policymakers look at cost-saving approaches for other drugs, these findings may provide important lessons for such efforts,” said Erin Taylor, the report's lead author and a senior economist at RAND, a nonprofit research organization, in the study announcement. “We found that such efforts can have positive results that are appreciated by Medicare beneficiaries, especially those who take multiple expensive medications.”
The Medicare Prescription Drug Benefit Program or Medicare Part D offers outpatient prescription drug coverage to people enrolled in Medicare. In response to escalating drug costs and variation in cost-sharing as beneficiaries move through the different Part D benefit phases, the Center for Medicare and Medicaid Innovation implemented the Part D Senior Savings Model test in 2021, 2022, and 2023. The effort tested the effects of lower, predictable drug cost-sharing, focusing specifically on insulin—a crucial medication for diabetes treatment.
The model allowed both standalone Prescription Drug Plans, which operate alongside Original Medicare, and Medicare Advantage Prescription Drug plans to provide insulin at a fixed copayment of no more than $35 for a one-month supply during the deductible, initial coverage, and coverage gap phases of the Part D benefit.
RAND researchers evaluated the three years of the model on a wide range of outcomes, including enrollee access to insulins, health outcomes, and beneficiary costs, as well as financial outcomes for plans, manufacturers, and the federal government.
They analyzed claims data and interviewed a wide assortment of stakeholders, including insulin users, drug manufacturers, insurance agents that help beneficiaries choose plans, and counselors from state health insurance assistance programs.
Researchers found that many of the expected changes occurred, including increased insulin use, lower overall Part D insulin user out-of-pocket drug costs, increased enrollment by insulin users in participating drug plans, increased payments made by manufacturers to participating drug plans, and reduced costs to the federal government.
“We found that as the out-of-pocket costs for insulins declined, insulin users were more likely to take the medication as prescribed,” Taylor said. “Patients reported that having a consistent out-of-pocket cost for insulin allowed them to better manage their expenses.”
However, researchers also found some results that were mixed or even counter to what was expected.
In addition to finding increased drug plan costs for beneficiaries who do not use insulin, researchers found that the model was associated with increased overall medical spending in 2021 and 2022 by insulin users enrolled in standalone Part D plans that capped insulin copayments.
The analysis also found that the lower insulin copayments were associated with increased risk scores for both types of Medicare drug plans—a key measure that affects federal government payments to plans for coverage. However, researchers did not find that the increased risk scores resulted in increased government costs.
The report notes that some of the findings were muted in 2023, when the cost-lowering mandates for insulin became permanent and extended to all Part D plans under the Inflation Reduction Act.
“Future drug models might extend the application of lower cost-sharing to other drugs and drug types to determine whether similar impacts on costs and quality might occur,” said report coauthor Dmitry Khodyakov, a RAND senior social scientist, in the announcement. “Our results suggest this approach could have value for both patients and payers.”
The evaluation was performed as part of a contract with the Center for Medicare and Medicaid Innovation within the Centers for Medicare & Medicaid Services.
Study finds link between seniors in value-based models to more consistent primary care
Patients who receive care from senior-focused primary care organizations that practice value-based care are more likely to regularly use primary care services in ways that support better health outcomes, according to a new study published in The New England Journal of Medicine Catalyst. The research was conducted by the Humana Healthcare Research team and Massachusetts General Hospital Attending Physician Dr. Suhas Gondi, who completed the research while a resident physician at Harvard Medical School's Brigham and Women's Hospital.
The study of more than 3.2 million Medicare Advantage beneficiaries across six senior-focused primary care organizations examined whether the level of value-based care enablement (via payment and care model innovation) was associated with beneficiaries receiving greater primary care intensity. It builds on previous research published last year in Health Affairs, which found that patients of senior-focused primary care organizations have better access to primary care compared to patients of other types of primary care organizations.
In the latest study, the research team found that value-based care, a health care delivery model that compensates physicians for improving patient health outcomes rather than the volume of services they provide, is associated with greater use of primary care services.
The study revealed:
- Compared to patients of primary care providers in fee-for-service payment arrangements, patients of senior-focused primary care organizations had 20 percent more primary care visits per year and 6 percent more regularly scheduled primary care visits.
- Seventy-five percent of senior-focused primary care patients experienced highly continuous primary care visits, compared to 55 percent of fee-for-service patients.
“With this latest study, we have discovered that patients within value-based care organizations are not only more likely to receive more primary care visits, but also to consistently see the same primary care provider and have more regular primary care interactions,” said Kate Goodrich, M.D., chief medical officer at Humana, in the study announcement. “This continuity of care means that physicians and other health care providers are more likely to have a comprehensive understanding of their patients’ medical history, preferences, and specific health needs, ultimately leading to improved diagnosis, treatment, and better overall health outcomes.”
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