Aetna and Humana confirmed on their most recent earnings calls that they’ve taken actions to trim benefits next year. UnitedHealth Group and Elevance Health told investors that financial challenges have them scrutinizing which benefits that go beyond fee-for-service Medicare will remain next year.
“Those are putting a lot of financial pressure on plans’ margins and, as such, they just don't have as much money to invest in supplemental benefits in their bids this year as they have had in the past,” said Alexis Levy, senior partner at HealthScape Advisors, which is part of the Chartis Group, a consulting company.
That spells bad news for companies on the receiving end of the supplemental benefits boom, Levy said. “It could definitely be a financial headwind for vendors if they're starting to see some of their customers cut back,” she said.
Medicare Advantage insurers have had a challenging 18 months, leading some to misforecast expenses and overpromise to investors. Higher medical costs and utilization, changes to the Star Ratings program and risk-adjustment programs, and a small rate cut for 2025 have pushed the major for-profit carriers to take hard looks at their offerings and geographic footprints.
Benefits galore
Medicare Advantage has grown in popularity among beneficiaries enticed by $0 premium plans and extra benefits, and now covers 32.8 million people, or more than half of the Medicare population, including disproportionate shares of people with low incomes and people of color.
The Centers for Medicare and Medicaid Services expanded the opportunities for Medicare Advantage insurers to offer benefits tangential to healthcare, and companies seized the moment by partnering with vendors. The number of plans offering these extra benefits has swelled and the types of benefits available have proliferated.
Medicare Advantage policies nearly always come with vision, dental and hearing coverage. Offerings such as physical fitness and transportation benefits are gaining traction while others, such as in-home support services, are still just emerging, according to CMS data compiled by KFF, a healthcare research institution.
Health insurers typically use supplemental benefits to attract members in a competitive market and to improve health outcomes and customer satisfaction, which translate into higher star ratings and bonus payments.
For example, Tivity Health, which provides the fitness program SilverSneakers to about 70 Medicare Advantage, Medigap and group retiree plans, produces tangible results, President and CEO Hill Ferguson, wrote in an email. Four in 10 SilverSneakers users visit a gym for the first time ever and the majority of enrollees with chronic conditions such as depression, sciatica and hypertension report improved symptoms after participating, he wrote.
Cuts coming
Vendors are paying even closer attention to their own data and sharing results with their insurer partners as they reconsider where to invest. Insurers are eyeing the most effective approaches as they prioritize improving margins over growing membership.
While common benefits such as vision, hearing and dental aren't likely to go away, the coverage may be less generous.
Health insurers may become more targeted with other emerging supplemental benefits next year by only offering them to specific populations that have generated stronger results, said Tricia Beckmann, principal at Faegre Drinker Consulting.
“The vendors that will be able to succeed are the ones that can really work with plans to make investments in smart ways and may be willing to pilot and collect the data story that plans need to understand the cost avoidance and the star ratings impacts,” Beckmann said.
What supplemental benefits cuts mean for members remain to be seen, but it could create barriers to care, said Mary Beth Donahue, president and CEO of Better Medicare Alliance, a coalition of beneficiaries, health insurers and providers.
“There are more low-income and minority beneficiaries who choose MA compared to fee-for-service, and that's across the board — Latino, Asian American and African Americans,” Donahue said. “If they're not having access to these benefits and this affordability, then that’s a health equity issue.”
Correction: A previous version of this story incorrectly stated that Medicare Advantage accounts for about one-fifth of Modivcare's revenue.
