Local Medicare Advantage competition heats up slightly: AMA

Competition among Medicare Advantage insurers has accelerated slightly on a local level over the past six years, according to the American Medical Association's annual report on the industry.

The average number of insurers selling Medicare Advantage plans in a single metropolitan area increased between 2017, when the AMA started tracking market share, and 2023. Individual companies' average market share also decreased. Nearly every market, however, was still considered "highly concentrated" according to Federal Trade Commission and Justice Department standards.

Related: Medicare Advantage market got more competitive in 2022: AMA

At 97%, almost all Medicare Advantage markets were highly concentrated in 2023, the same percentage as in 2022, the report said. Researchers used the FTC’s updated December 2023 guidelines to measure market competition.

A single insurance company held at least half of the Medicare Advantage market share in 30% of metropolitan areas in 2023.

Among all metropolitan statistical areas surveyed, UnitedHealth Group's subsidiary — and industry leader — UnitedHealthcare’s Medicare Advantage market share grew to 29% in 2023, up from 28% in 2022 and 25% in 2017, according to the organization.

Medicare Advantage enrollment has grown as more people have aged into the program. Companies have attracted members by offering generous supplemental benefits, low cost-sharing responsibilities and captivating marketing, among other things. More than half, or 54%, of all eligible Medicare beneficiaries are enrolled in Medicare Advantage this year, according to the Centers for Medicare and Medicaid Services. CMS anticipates Medicare Advantage enrollment to grow 4% to 35.2 million members in 2025.

In addition to being the largest Medicare Advantage insurer by market share nationally, UnitedHealthcare holds the title as the largest commercial insurer. The company held 15% of the national commercial insurance market share in 2023, up from 13% the previous year, the report said. Elevance Health and CVS Health subsidiary Aetna tied for second in market share lead in with 12% and Cigna, which held 11% of the national market share, came in third.

For the commercial health insurance market last year, 95% of areas lacked a competitive market, and the same portion was deemed anti-competitive in 2022, according to the AMA. A single insurer held at least 30% market share in 89% of areas, and one insurer controlled most of the market in 47% of locales.

For the health insurance exchanges, 99% of the market was highly concentrated last year, and one carrier held at least half the market share in 64% of areas.

A lack of competition among insurers negatively affects patients and providers, the AMA report said. The group called on the DOJ and FTC to tighten scrutiny of health insurance mergers.

The AMA report examined 382 metropolitan statistical areas across 50 states and the District of Columbia. The advocacy group updates the survey annually to help researchers, policymakers and regulators identify markets where deals involving insurers could limit competition to providers and patients. It largely classified and labeled insurers by the parent organization.

Insurance lobbying group AHIP did not respond to an interview request. Cigna, CVS Health, Elevance Health and UnitedHealth Group did not immediately respond to interview requests.