In March 2010, 11.1 million Medicare beneficiaries were enrolled in Medicare Advantage (MA) plans, up from 10.5 million in March 2009. Enrollment in private fee-for-service (PFFS) Medicare Advantage plans declined as some firms left the market, but the losses were more than offset by gains in enrollment in coordinated care plans, particularly local and regional preferred provider organizations (PPOs).
A new analysis by the Kaiser Family Foundation finds a small number of firms dominate Medicare Advantage enrollment both nationally and in most states; for example, in 14 states and the District of Columbia, a single firm accounts for more than half of all Medicare Advantage enrollment. This is true despite the fact that the average Medicare beneficiary has 33 Medicare Advantage plans available in their area, with the average enrollee paying a monthly premium of $44 per month, a 22 percent increase since 2009 ($36 per month). The health reform legislation of 2010 gradually phases down payments to Medicare Advantage plans over time, which is expected to ultimately affect plan participation, enrollment, premiums, and extra benefits. Yet, even with these changes, Medicare Advantage plans can be expected to remain an important option for many beneficiaries. By using this information, agents can understand what clients in their area might be interested in purchasing, and make educated decisions based on buying habits.
Medicare Advantage enrollment increased 5.7 percent between 2009 and 2010, with
11.1 million beneficiaries in Medicare Advantage plans, or almost 1 in 4 (24 percent) Medicare beneficiaries. Most (83 percent) beneficiaries in Medicare Advantage plans enrolled individually; the rest are retirees enrolled through group plans offered by a former employer. In 2010, individual enrollment increased 5.8 percent and group enrollment increased 4.9 percent. The gain in enrollment occurred even though the total number of Medicare Advantage plans declined by 18 percent from 2009 to 2010, mostly due to fewer PFFS plans and consolidation of smaller plans.
Enrollment by plan type
The distribution of enrollment across plan types shifted in 2010, with fewer beneficiaries in PFFS plans and more beneficiaries in PPOs. PFFS enrollment declined by 0.7 million in 2010, reversing what had previously been a steady growth in enrollment since 2005. The decline in PFFS enrollment was more than offset by a 43 percent increase in PPO enrollment between 2009 and 2010. As was the case in previous years, HMOs dominate enrollment, with nearly two-thirds of all Medicare Advantage enrollees (65 percent) in an HMO in 2010, but local and regional PPOs — whose enrollment almost doubled between 2009 and 2010 — now have a growing share of the market. In 2010, 12 percent of Medicare Advantage enrollees were in local PPOs and 7 percent in regional PPOs. The growth in regional PPOs is driven heavily by the almost doubling of PPO enrollment in UnitedHealthcare regional PPOs and the substantial growth in this segment by Humana.
HMOs dominate enrollment in urban counties (69 percent), while PFFS plans account for the largest share of enrollment in rural counties (37 percent). Local and regional PPOs gained a substantially larger share of the rural market, with the rural market share of each increasing from 8 percent in 2009 to 14 percent in 2010.
Geographic variation in enrollment
Reflecting both the greater prevalence of Medicare Advantage plans in urban counties as well as other factors that account for variation in Medicare Advantage enrollment, Medicare
Advantage penetration varies substantially by state. In 10 states (AK, DE, IL, MD, MS, ND, NH, SD, VT, and WY), less than ten percent of all beneficiaries are in a Medicare Advantage plan. Medicare Advantage continues to be virtually nonexistent in Alaska, with only 85 people enrolled in 2010. By contrast, 41 percent of beneficiaries living in Oregon are enrolled in a Medicare Advantage plan, and in 12 other states, 30 percent or more of beneficiaries are in a Medicare Advantage plan. Even within states, Medicare Advantage penetration often varies considerably across counties. For example, 36 percent of beneficiaries in Queens county, New York are enrolled in Medicare Advantage plans in 2010, but only 20 percent of beneficiaries in Nassau county, the neighboring county, are enrolled in Medicare Advantage plans in 2010.
Enrollment by firm
A small number of firms continue to dominate the Medicare Advantage market. One third of all Medicare Advantage enrollees in 2010 are in plans affiliated with two firms — UnitedHealthcare (18 percent) and Humana (15 percent). Blue Cross/Blue Shield (BCBS) affiliates, which are multiple independent firms sharing the BCBS trademark, account for 15 percent. Kaiser Permanente accounts for the next largest share of the market (9 percent) and Aetna accounts for 4 percent. The remainder of enrollment is in a combination of other national firms (such as Universal American, HealthNet, Coventry, Health Spring, and Wellcare) and more locally based firms, some of which are relatively large within their individual markets. Some large firms experienced large decreases in enrollment between 2009 and 2010, including Coventry (60 percent decrease), WellCare (53 percent decrease), Wellpoint (40 percent decrease), and Sterling (29 percent decrease).