Clover Health, a venture capital-backed startup that sells health insurance to seniors, is planning a big expansion into more states and counties next year on the heels of rapid membership growth in 2019.
San Francisco-based Clover said it intends to sell Medicare Advantage plans in 69 additional counties in its existing markets of Arizona, Georgia, New Jersey, Pennsylvania, South Carolina, Tennessee and Texas. It will also enter five counties in Mississippi, a new market. Currently, Clover sells Advantage plans in 34 counties across seven states.
Many health insurers beyond Clover have been clamoring for a piece of the lucrative market, either by expanding into new locations or acquiring rival Advantage insurers. Late last month, Bright Health, another insurance startup also announced plans to sell Medicare Advantage plans, in addition to individual and family plans, in several new areas. In May, it said it bought Brand New Day, an Advantage plan serving California seniors.
Large Medicaid managed care insurer Centene Corp. also set its sights on Medicare Advantage when it acquired WellCare Health Plans in January for $17 billion. That takeover more than doubled Centene's Medicare membership to roughly 976,700 in the first quarter of this year.
The market for Medicare Advantage appeals to insurers because it has grown more quickly than other insurance markets as Baby Boomers turn 65 and increasingly choose the private alternative to traditional Medicare. In 2020, 24.1 million people—or more than a third of all Medicare beneficiaries—were enrolled in Advantage, up from 11.9 million a decade ago, according to the Kaiser Family Foundation.
Clover plans to expand despite not yet having turned a profit. The insurer recorded a net loss in 2019 of $67.4 million and a net loss of $40.9 million the year before, according to documents filed with the National Association of Insurance Commissioners. Clover posted revenue of $451.7 million in 2019, up 56% from the year before. Its enrollment grew about 10,000 members between 2018 and 2019, ending the year with more than 42,400 members. The company said it currently serves 57,000 members.
"We're continuing to expand because our mission is to bring the best healthcare to as many people as possible. Despite small losses last year, we're incredibly confident in our approach," Andrew Toy, Clover president and chief technology officer, said in an email.
Toy said the company is "focused on reaching profitability soon," but did not say whether or not it expects to profit in 2020. He also said that it's "impossible" to predict the impact that the COVID-19 pandemic would have on the company's bottom line. The pandemic so far has proven to be a boon to many for-profit health insurers.
