Oscar Health, the technology-driven, consumer-focused health insurer, is already in the individual and small employer markets. But big money from the parent company of Google will allow the six-year-old company to add Medicare Advantage plans to the mix. Kevin Mowll, executive director of the RISE Association, weighs in on why so many companies want a piece of this market.
Another insurer is making inroads into the Medicare Advantage (MA) market.
A $375 million investment from Alphabet, the parent company of Google, will allow Oscar Health, a technology-driven, consumer-focused health insurer, to offer MA plans by 2020.
The New York-based insurer is already in the individual market and small employer market. The funds from Alphabet will allow the company to launch new product lines, such as MA, Mario Schlosser, CEO of Oscar Health, said in an interview with Wired.
Oscar isn’t the only company eyeing the MA market. Earlier this month Bright Health announced it would offer MA plans in New York City in 2019. In July, Centene Corporation signed a letter of intent with Ascension, the world’s largest Catholic health system, to explore a joint venture to establish a MA plan in multiple geographic markets beginning in 2020.
Everyone wants a share of the MA market, notes Kevin Mowll, executive director of the RISE Association. It’s no wonder. Since the passage of the Affordable Care Act in 2010, MA enrollment has grown 71%, according to an analysis from the Kaiser Family Foundation. As of 2017, one in three people with Medicare (33% or 19 million beneficiaries) is enrolled in a MA plan.
A 2017 report from global management consulting firm L.E.K Consulting projects that MA enrollment will rise to 38 million, or 50% penetration, by the end of 2025 and won’t slow down until its penetration rate reaches 70%.
Mowll doesn’t know whether penetration will reach as high as 70%, but says there are several reasons for the growing interest in the market.
Although the Affordable Care Act included significant cuts to MA plan payments over a six-year period, the finances of the MA have seen better year-over-year payment increases.
“Add to that, there is a double-whammy effect on adoption of MA plans,” he says. “First, the much-anticipated age-wave of Boomers has landed with full force and effect, and second, these Boomers are comfortable with managed care plans like HMOs and PPOs, as that was what they had during their working careers, and consequently a larger portion of the retirees are opting for MA plans rather than Medicare Supplement products now.”
“While 33% of all beneficiaries are in MA plans, the adoption rate for age-ins is much higher,” Mowll says.
Interested in learning more about this topic? Join us for the 2018 Medicare Product Design Master Class, Sept. 13-14, in Phoenix.