IndividualMedicare Advantageenrollment increased by 11% (to nearly 22 million beneficiaries). The largest plans are getting bigger by increasing their product line and marketing spend. In particular, their wider offering of PPO, D-SNP and C-SNP plans allows them to better target and acquire specific beneficiary segments (i.e., LIS, chronic, dual, PDP-to-MAPD and Medigap-to-MAPD converters) across all enrollment periods.
Medicare Advantage Growth
Individual Medicare Advantage enrollment increased by 11% to 22 Million Beneficiaries.
The Big Plans are Getting Bigger
The big plans are getting bigger by increasing their product line and marketing spend. In particular, their wider offering of PPO, D-SNP and C-SNP plans allows them to better target and acquire specific beneficiary segments (i.e., LIS, chronic, dual, PDP-to-MAPD and Medigap-to-MAPD converters) across all enrollment periods. Their challenge in AEP 2022 is how to improve lead targeting and quality to increase member persistency.
Startups are Gaining Ground
Although still relatively small, new entrants like Alignment, Clover and Devoted are rapidly growing membership with simplified and highly competitive plan designs, such as $0 to low premium PPO, low copay and market matching extra benefits. Their challenge in AEP 2022 is to smartly target expansion markets and quickly adapt to local distribution norms to continue their growth.
Local Plans are Struggling
Local plans are being squeezed by national plans gaining share by introducing higher benefit and lower premium plans and startups testing and implementing simplified plans with market matching benefits and innovative member engagement programs to keep them loyal and less likely to shop. Their challenge in AEP 2022 is to develop more effective retention and growth strategies that take advantage of their local market expertise and large commercial group business.
MA Enrollment Growth Continues with PPO and C/D-SNP Plans Leading
The Individual Medicare Advantage market grew by 10.5% to 21.5MM. PPO and Special Needs Plans enrolled more members than other Medicare Advantage plan types. Increasing availability of and enrollments into PPO and SNP plans by national/regional plans continues. The national and startup plans are taking even more share from local plans (especially the Blue Cross Blue Shield affiliates), who struggle to compete on price, plan design and supplemental benefits.
Medigap+PDP-to-MAPD Conversion is Increasing
Significant increase in PPO enrollments (+25% or 1MM members) combined with decreasing PDP membership (-3.1% or 624k members) indicates Medigap+PDP to MAPD PPO conversion is accelerating in select states.
This trend represents significant risk to Medicare Supplement carriers (especially the Blues) whose members are increasingly switching to $0 to low premium PPO plans to save money and access extra benefits.
This trend also represents significant opportunity for PPO carriers who now have access to some 22% of Medicare beneficiaries who are still on supplement plans.
PPO plans with $0 to low premium gained more enrollments in states (In order – FL, GA, NY, TX, MI, SC, IL, VA) that also experienced the most PDP disenrollments (In order - TX, MI, NY, GA, IL, VA, SC, NY).
A key driver of Medigap to MAPD PPO conversion may be due to increasing PDP premiums and higher drug copays, especially for tiers 4 and 5 which can be significantly higher in a standalone PDP plan.
The Rx and premium savings combined with extra benefits like dental, vision and hearing bound by MOOP makes for a compelling value proposition for the $0 to low premium PPO plan.