Despite multiple large insurers pulling back on Medicare Advantage (MA), about 51% of Medicare beneficiaries are expected to be enrolled in an MA plan come 2025.
The Centers for Medicare & Medicaid Services (CMS) has created a less rosy payment environment for MA plans over recent years, and that has forced some plans to exit certain markets.
But early projections suggest that, while MA penetration may slow in coming years, it has not yet tapered off in a significant way.
UnitedHealth Group (NYSE: UNH) and Humana Inc. (NYSE: HUM) are the two largest MA administrators, and also own two of the largest home health agencies in LHC Group and CenterWell Home Health, respectively. UnitedHealth Group is also nearing a deal to acquire Amedisys (Nasdaq: AMED), another one of the largest home health providers.
Other home health providers have seen their bottom lines impacted by MA penetration over the years. Broadly, MA plans generally pay below traditional Medicare for home health services, oftentimes by a large margin.
“CMS projects total MA enrollment will grow to 35.7 million lives in 2025 (vs. ~34.3 million lives as of September 2024) with MA penetration of Medicare expected to rise to 51%,” an analyst note the investment firm Stephens read. “This implies expected low- to-mid single digit MA market growth relative to current enrollment. Importantly, the MA market should still likely grow as fast (or faster) than the overall Medicare market even as products and footprints are adjusted to reflect ongoing MA margin pressures.”
Humana, Centene’s (NYSE: CNC) WellCare, Aetna and BlueCross BlueShield have all announced that they will exit certain markets in 2025 in light of the MA rate environment.
On Friday, though, CMS announced that key parts of the MA program will “remain stable” in the upcoming year.
“CMS announced that average premiums, benefits and plan choices for Medicare Advantage (MA) and the Medicare Part D prescription drug program will remain stable in 2025,” the agency wrote in a press release Friday. “Average premiums are projected to decline in both the MA and Part D programs from 2024 to 2025. Enhancements adopted in the 2025 MA and Part D Final Rule, as well as payment policy updates in the 2025 MA and Part D Rate Announcement, support this stability and increase enrollee protections and access to care for people with Medicare.”
CMS also said that supplemental benefits will remain stable, but particularly called out dental, hearing and vision benefits.
“Benefit options will remain stable, including MA supplemental benefit offerings such as hearing, dental, and vision,” CMS continued. “The amount of rebate dollars, which can be used for supplemental benefits, will remain stable, with a slight increase, from 2024 to 2025. Enrollment in MA is projected to be 35.7 million in 2025, an increase from 2024, with MA enrollment representing approximately 51% of all people enrolled in Medicare.”
For context, only 31% of Medicare beneficiaries were enrolled in MA a decade ago, according to KFF.
A slew of health systems and home health providers have also recently severed ties with certain MA plans. In most cases, those decisions were made over lack of payment, too much administrative burden, or both.
