Medicare Advantage 2016 Data Spotlight: Overview of Plan Changes
Plan choices for beneficiaries will be relatively stable between 2015 and 2016, with very little change in the number or type of plans available to beneficiaries or the firms offering those plans. In 2016, there will be relatively few plan exits that could cause disruption in coverage. Firms continue to offer diverse products and most beneficiaries have a choice of HMOs and PPOs, while fewer beneficiaries have access to PFFS plans. Medicare Advantage plans’ low premiums (relative to Medigap) and their ability to package traditional Part A and B benefits, prescription drugs, and some aspects of supplemental coverage into a single offering have proven popular both with insurers and a sizeable subgroup of Medicare beneficiaries.
Medicare beneficiaries enrolling in a Medicare Advantage plan will find that the plans available to them, on average, have somewhat higher quality ratings in 2016 than in 2015 but provide less financial protection with higher out-of-pocket costs. While premiums are rising at a somewhat slow rate, a higher share of plans will set their out-of-pocket limit for Part A and B benefits at the maximum amount allowed ($6,700), with few plans setting the limit at the lower standard encouraged by CMS ($3,400). Additionally, more plans are requiring enrollees to pay a deductible for Part D drugs, exposing Medicare beneficiaries with relatively high health care costs to greater financial risk. The reality is that both traditional Medicare and Medicare Advantage plans face challenges in providing financial protection to beneficiaries, in that traditional Medicare does not have an out-of-pocket limit for Part A and Part B covered services.
The Department of Justice is considering proposed mergers among some of the leading national firms in the Medicare Advantage market—Aetna’s proposed acquisition of Humana and Anthem’s proposed acquisition of Cigna. While the four firms’ products differ from one another, their combined share of the Medicare Advantage market means that the acquisitions could have important implications for the Medicare Advantage program. Aetna and Humana together account for about one-quarter (26%) of all Medicare Advantage enrollees, while Anthem and Cigna together account for about six percent of all enrollees in 2015.1
The potential effect of the proposed acquisitions on Medicare beneficiaries is not yet clear. For the individual Medicare Advantage market which we focus on here, mergers may affect the number of plan choices available to beneficiaries if the merging firms decide to consolidate plans, but divestiture requirements could offset some of this reduction. Mergers could also reduce the number of different firms offering plans and competing for enrollees, and this effect is likely to vary across the country. While the average beneficiary in 2016 will have plan choices offered by six firms, one-quarter of all beneficiaries in 2016 will have only three firms competing for their business. While mergers will affect the national marketplace, they also have very specific effects on individual markets that require analysis that anticipates the potential short and long term consequences, as well as any related effects on the characteristics of plans that are offered, and implications for beneficiaries’ costs and access.2
Gretchen Jacobson, Tricia Neuman, and Giselle Casillas are with the Kaiser Family Foundation; Anthony Damico is an independent consultant; and Marsha Gold is a Senior Fellow Emeritus with Mathematica Policy Research and independent consultant.