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10 Worst States for Medicare Advantage Sticker Shock

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The Medicare annual enrollment period for 2020 is well under way, and one of the big questions on your clients’ minds is, “What will  that coverage cost?”

Analysts at Mark Farrah Associates recently pointed out that 49% of the Medicare Advantage plans sold come with no premium bills for the enrollees. The federal government covers the full cost of the coverage by paying the issuer a capitation payment for providing the coverage.

(Related: ‘Free’ Medicare Advantage Plans Are Hot: Mark Farrah Associates)

But about half of the plans available do come with premium bills. The average premium bill varies widely from state.

Of course, part of that difference could simply reflect differences in state health care costs.

The Medicare Advantage plan enrollee premium is comparable to the employer share of group plan costs. An enrollee in a Medicare Advantage plan is paying the difference between what the government is paying the plan and what the plan managers want to charge, just as the group plan members pays the difference between what the employer wants to pay and the full cost of providing the coverage.

We tried to adjust for state-to-state health care cost differences, and get at how the Medicare Advantage plan prices really compare with ordinary group health coverage prices, by calculating a “Medicare Advantage pricing power ratio” — the ratio of the average Medicare Advantage plan premiums in a state to what large employer plans in the state charge the average worker for individual coverage.

In other words: When people retire from big group health plans, will the Medicare Advantage plans in their state look expensive to them, or cheap?

For a consumer who wants low Medicare Advantage premiums, a lower ratio is better.

At the state level:

  • The average annualized Medicare Advantage premium ranges from $215 up to $1,205, with a median of $548.
  • The average worker contribution for large-group health coverage ranges from $869 to $1,832, with a median of $1,421.
  • The Medicare Advantage pricing power ratio ranging from about 15%, in Florida, up to a high of 85%, in one state, in the Northwest.

The ratio is lower than 100% in every state, but, in some states, Medicare Advantage plan premiums are somewhere in the ballpark of group plan enrollee premium costs.

For a look at the 10 states with the highest Medicare Advantage pricing power ratios, see the data cards in the slideshow above. (Wiggle your mouse over the first slide to make the control arrows show up.)


We started with 2020 county-by-county Medicare Advantage plan cost data from the Centers for Medicare and Medicaid Services.

We came up with average plan premium costs for each state, then divided those figures by data from a CMS sister agency, the Agency for Healthcare Research and Quality. The most recent data tables from that agency are for 2018. We used the state average figures for employers with 1,000 or more employees, for workers who have individual health coverage.


State-to-state differences in the ratio of typical Medicare Advantage premiums to workers’ share of the group health premiums could reflect many factors, including:

  • How competitive a state’s labor market is.
  • The dominant carriers’ ideas about pricing.
  • State insurance regulators’ ideas about pricing.

The differences could also reflect how strong a state’s Medicare Advantage plan negotiators are when compared with other payers’ negotiators. In a state with a low pricing power ratio, Medicare Advantage plan negotiators may have extra clout. In a state with a high Medicare Advantage pricing power ratio, negotiators for large employers or state Medicaid plans might be the ones with the clout.

In other states, the ratios might be high because Medicare Advantage plan coverage is especially popular, and consumers are willing to pay more for Medicare Advantage plan coverage.


Medicare Advantage plan premium data tables for 2020 are available here.

State-by-state employer plan cost data tables are available here.

— Read Medicare Managers Post 2020 Producer Comp Summarieson ThinkAdvisor.

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