Kaiser: Medicare Advantage 2013 Spotlight

Despite concerns that the Patient Protection and Affordable Care Act would lead to reductions in Medicare Advantage (MA) plan enrollments, 14.4 million Americans were enrolled in a MA plan as of March 2013, an increase of >12 million over 2012. Since 2010, total MA plan enrollment has grown by 30% and, since 2005, has increased by a factor of 2.6.

In June, the Henry J. Kaiser Family Foundation released an issue brief on MA enrollment patterns as of March 2013. The brief was titled Medicare Advantage 2013 Spotlight: Enrollment Market Update.

The majority of Medicare beneficiaries who enroll in a MA plan do so as individuals, but 18% are enrolled through group plans, largely employer-sponsored plans for retirees. Employer-sponsored plans generally contract with MA plans directly to design a benefit package that meets the needs of retirees. In this market, preferred provider organizations (PPOs) have a larger share of enrollment compared with health maintenance organizations (HMOs).

The report noted substantial variation by state and within states in MA penetration. In 2013, 6 states (Arkansas, Delaware, Maryland, New Hampshire, Vermont, and Wyoming) had <10% of beneficiaries in MA plans, whereas the national average is 23%. Fourteen states have ≥30% of Medicare beneficiaries enrolled in an MA plan.

There is also variation within states: 57% of beneficiaries in Miami-Dade County, Florida are enrolled in MA plans, compared with 35% in Palm Beach County. Likewise, 46% of beneficiaries in Orange County, California, are enrolled in a MA plan compared with 14% of beneficiaries in Santa Barbara. In 2013, MA enrollment and penetration rates increased in all states with the exception of Wyoming and Utah.

Five firms or affiliates account for two thirds of all MA plan enrollment: (1) United Healthcare (21%), (2) Blue Cross and Blue Shield affiliates (17%, including 4% in WellPoint BCBS affiliates), (3) Humana (17%), (4) Kaiser Permanente (8%), and (5) Aetna (4%). Seven other national firms account for 11% of enrollment, and the remainder is in plans offered by locally or regionally focused firms.

MA enrollees pay their Part B premium in addition to the premium charged by the MA plan. The average enrollee in a Medicare Advantage Prescription Drug (MA-PD) plan paid a monthly premium of $35 in 2013, approximately the same as in 2012 and down from $39 in 2011 and $44 in 2010. HMOs have slightly lower premiums compared with other plan types. On average, enrollees in HMO plans saw a 6% decrease in their premium from 2012 ($29 in 2012 vs $27 in 2013). In other plans, premiums increased from 2012 to 2013: average premiums in regional PPOs increased by 8% (from $26 to $29), by 9% in local PPOs (from $53 to $57), and by 22% in provider fee-for-service (PFFS) plans (from $42 to $51).

Currently, nearly 98% of beneficiaries have access to a MA-PD plan with no premium other than a Part B premium, and 55% are enrolled in a zero-premium plan. Among those in HMOs, 67% are in a plan with no premium. Zero premium plans are also common (49%) for enrollees in regional PPOs, but less common for those in local PPOs and PFFS plans (24% and 17%, respectively).

In 2011, the Centers for Medicare & Medicaid Services began requiring that all MA plans have an out-of-pocket limit of <$6700. Since then, all MA plans have a limit on out-of-pocket spending, and nearly half (46%) of all MA enrollees have a plan with a ≤$3400 annual limit, 30% have a plan with a limit of $3401 to $5000, and 24% are in plans with limits of $5001 to $6700.

The report’s authors concluded by noting that, “Ultimately, the shape of both Medicare Advantage and the Medicare program more generally will be shaped by the policy and fiscal climate. There are very different perspectives on the kinds of protections Medicare needs to provide for seniors and younger enrollees with disabilities, the appropriate level of Medicare spending and how to finance it, and how Medicare benefits should be provided. The outcome of the debate over these issues likely will influence, in critical ways, the future of Medicare Advantage and the Medicare program more generally.”