By Rachele Elasky, product manager, and Sarah Chien, analytics solutions manager, Carrot Health.
The Centers for Medicare and Medicaid Services (CMS) in recent months predicted both lower premiums and richer benefits for Medicare Advantage (MA) plans in 2021. Specifically, CMS anticipated a decrease in average premiums of more than 34% from 2017 levels while plan choice, benefits, and enrollment increased—making the average monthly premium the lowest in 14 years.
But while CMS accurately depicted the indisputable trend of moving toward lower costs and higher value in MA offerings, it did not tell the whole story. To do that, we consolidated and reported on all Medicare Advantage and Prescription Drug Plan (PDP) benefit data nationwide released by CMS. This provides a much clearer picture on how these trends impact individual members vs. across member populations.
Following are the highlights of that analysis.
More Plans Offered Than Ever Before
There will be a 13% increase over 2020 in the number of MA plans available nationwide for individual enrollment in 2021. At 3,545, this is the most plans ever offered and includes 665 new plans—a nearly 4% increase from the 642 new plans offered in 2020.
While MA enrollment is rapidly increasing, the competition is growing even faster. In 2021, there will be 21.5 MA plans in the country for every 100,000 beneficiaries. That compares to 16.8 plans per 100,000 in 2018, which is an increase of more than 53% in just four years.
This growth is not uniform across the country, however. Densely populated markets in the Northeast such as metropolitan geographies typically have the most plans to choose from although enrollment growth rates have been higher in more rural areas of the country in recent years.
New Plans, More Value
New MA plans being introduced into the market for 2021 generally offer more value than existing plans through lower premiums and richer benefits. Among new plans, premiums are one-fifth of those for existing plans ($9 vs. $42), anticipated out-of-pocket costs are lower, and nearly every supplement benefit is offered at a higher rate.
Three supplemental benefits on the rise among new and existing plans are meal (up 60%), transportation (up 29%), and over-the-counter drug (up 77%) benefits. While these increases are across the board, newer plans offer the highest increase in all three categories.
Response to COVID-19
Our consumer research indicated that MA beneficiaries were overwhelmingly satisfied with their health plan’s response to COVID-19. This is partly due to CMS allowing a rare Special Election Period that allowed carriers to add or enhance benefits to support their beneficiaries during the pandemic.
Medicare consumers make up a large majority of the population particularly vulnerable to the virus, leading many carriers to provide aid and supplemental benefits mid-year. Among these were meal benefits, transportation, free COVID tests, and virtual visits. Further, driven by the success of virtual visits during the pandemic, more than 94% of plans will offer additional telehealth benefits to their beneficiaries in 2021, up from about 64% in 2020.
AEP Expectations For 2021
In 2020, there were five key themes that captured big trends and movements in the Annual Enrollment Period (AEP):
- Preferred private organization (PPO) enrollment growth (11.7%) outpaced Health Maintenance Organization (HMO) enrollment growth (2.1%).
- National carrier enrollment growth continued to outpace regional carrier growth.
- Enrollment growth was highest with $0 premium plans, increasing by more than 13%.
- Enrollment growth rates were highest in rural geographies—small metros, micropolitan, and non-core counties.
- Plans offering richer supplemental benefits, both traditional and new SSBCI benefits, grew at the highest rates.
We expect these trends to continue in 2021. For example, the number of PPO plans available in 2021 increased by 22% and HMOs only increased by 10%. Thus, growth in PPOs should continue to outpace HMOs, and switching from an HMO to a PPO will be common.
National carrier growth rates will increase as well, with their share of MA enrollees reaching 65%. These large payers are expected to increase available plans by 11% over 2020 and up to 1,690 plans in 2021. That growth comes despite regional carriers offering more plans than their national counterparts.
Lastly, the number of $0 premium plans offered in 2021 is up 25% over 2020, while plans that feature premiums only increased by 0.38%. Consequently, expect to see enrollment growth in no-premium plans outpace plans with premiums for yet another year.
The 26 million members expected to enroll in MA plans in 2021 could see the lowest average monthly premium ($21) since 2007. However, while premiums will likely be at an all-time low, it is important to consider the impact on the average beneficiary rather than focusing only on aggregated averages. At the individual level, nearly 14% of Medicare Advantage enrollees will see their premiums increase in 2021 compared to less than 10% who will see decreases.
In addition to these new insights, we expect to see several growth trends from last year continue into 2021. These include continued growth of national over regional carriers, more benefit-rich $0 premium plans on the market, ongoing growth in the availability of PPO plans, and a continuation of benefits to support members throughout the pandemic.
Ultimately, as revealed by a closer look at CMS data, these trends mean consumers will continue to have their demands for more choice, lower premiums and greater flexibility met by enhanced benefits and greater plan options.