Carrot Health Insights | 2019 Medicare Advantage Market Dynamics

Published on October 17, 2018

 

Around October 1 every year, the Centers for Medicare and Medicaid Services (CMS) releases detailed benefits data for every Medicare Advantage and Standalone Part D Plan that has been approved for the upcoming year. On this date, health plans learn exactly which competitors they will face, and exactly what products will be offered in each service area — premiums, deductibles, out-of-pocket costs, prescription drug coverages, and more.

The CMS data release sets off the equivalent of a stampede in the health plan world. Sales, marketing, and product teams have three months to evaluate the competition, channel marketing resources, and kick off a new cycle of product development. We’ve been busy analyzing the latest data (and updating Carrot MarketView so that our customers can, too!) Here are some things we’ve learned about the Medicare Advantage market in 2019:

  • Strong, but uneven, new market entrant momentum: Of the roughly 2,900 counties with an individual MAPD contract (non-EGHP, non-SNP) in 2018, one in five will see at least one new contract in 2019. Many counties will see just one, but some will see four or five (Minneapolis-St. Paul, MN and Bexar, TX). Much of this growth is attributable to large national carriers entering new markets. In Minneapolis-St. Paul, the main driver is the upcoming sunset of Cost plans.

New 2019 Contracts (red = fewer, blue = greater)

  • Contract density by county: The number of individual MAPD contracts ranges from one to 24 (Broward and Miami-Dade, FL), with an average of 6.5 per county. Plan density correlates strongly, but not perfectly, with population density and total Medicare Advantage enrollment.

2019 Contract Density (red = low, blue = high)

  • Market penetration and maturation: By normalizing the contract count in a given county to control for total enrollment, we can identify markets that are highly penetrated (i.e., that have a high relative concentration of plans) and under-penetrated (a low relative concentration). For example, the Toledo metro area is highly penetrated. It has 21 total Individual MAPD contacts, provided by 11 organizations, for roughly 28,000 individual enrollees. One-third of these contracts are zero dollar premium; of these, one-third offer Part D with no deductible. But half of the new plan contracts are zero dollar premium, and half of these offer Part D with no deductible. In other words, new products being introduced to the market are disproportionately cheaper. This dynamic is not unique to Toledo. Most markets are evolving in a similar fashion — the rate of maturation depends on local provider engagement, costs, and consumer preferences.

Carrot Health Medicare Advantage Market Penetration Index (red = low, blue = high)

  • Significant local variation in market penetration: As the Carrot Health Medicare Advantage Penetration Index shows, the Mountain States, Pacific Northwest, California, and Southwest are generally less penetrated than the rest of the country. But even in more fully served regions like the Midwest, there are numerous pockets of local under-penetration that may represent attractive growth opportunities:

Top 5 Under- and Fully-Penetrated Medicare Advantage Markets

Although the overall Medicare Advantage sector is showing strong growth heading into 2019, the dynamics of each sub-market vary significantly from one county to the next. This means that sales, marketing, and product teams need to harness highly localized information, such as plan benefit data and consumer preferences, to win the battle for next year’s market share — and stay in front of the stampede.

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