Have we reached peak Medicare Advantage Mania?
Medicare Advantage coverage has seen significant growth in popularity over the last 10 years. You’ve seen the TV commercials, listened to the endless radio spots, gotten countless pieces of mail, or even that celebrity endorsement. In short, the advertising is everywhere you look. It seems the craze is going strong —have we reached peak Medicare Advantage mania? Short answer: a definitive Yes!
The MA market is on a completely different trajectory than it was 2 years ago. It’s on a different planet compared to 5years ago. The headwinds have changed, and the market is attempting to shift—the attempts to move will ultimately cause it to regress.
The headwinds these last few years are stiff. The Inflation Reduction Act restructured Part D payments, ultimately shifting a significant share of the cost to the insurer. The star rating is under scrutiny and has been pared back, resulting in lower revenue for carriers from quality ratings. Health Risk Assessments have been exposed, leading to federal lawsuits to claw back billions in risk-adjusted premium payments.
Here’s how companies are attempting to adjust. Many companies are changing their coverage portfolio to reduce less cost-effective plans by removing them from the market or throttling their exposure. Cutting measures have included reducing the benefits customers have come to love, such as dental care, reduced-cost cardio rehab, and over-the-counter options, etc. Some major carriers have used preauthorization to slow down claims and manage unnecessary claim costs. So, where is it going? Why will it lead to regression?
Carriers are attempting to reduce market choice and test the waters by going direct to consumers. While going direct to consumers would be bad news for our brokerage, Senior Legacy Partners, it would also have grave effects on consumers and the marketplace. Without brokers in the mix helping clients find the best plan that maximizes benefits for their individual needs, most options in the market will become generic and uniform. Carriers will no longer need to compete on price, features, and benefit structure. The market will be dominated by brand awareness and network dominance, leaving the consumer to pick up the pieces. How long will it take? Will Medicare Advantage lose favor?
Hopefully, we never get there. The results would ultimately hurt seniors who rely on the coverage most. I don’t think Medicare Advantage is going away. It is still a very attractive plan for many seniors. But with out-of-pocket costs going up and extra benefits being slashed, Medicare Supplements may shine again for some consumers. But in the meantime, get help from a local independent broker. Someone who lives, works, and worships in your community. Senior Legacy Partners is here to help during this year’s AEP.