The higher costs of traditional Medicare, lack of managed care and fewer benefits could persuade the newly-eligible to stick with their branded insurance plan, Wagar said. At Cigna, 150,000 of its existing Medicaid, individual and commercial members age into Medicare each year. At Anthem, 200,000 existing beneficiaries reach Medicare-eligibility annually. Wagar said insurers should make this transition as easy as possible for enrollees and focus on growing their employer-sponsored coverage in industries with a large number of workers over 60, like government, automotive or healthcare.
Payers could also benefit from moving Medicare and Medicaid dual eligibles to Advantage plans, since they have the most to gain by effectively managing their care, Wagar said. But across the board, he said insurers should take the cues of tech companies like Amazon and invest in market research to better understand what services soon-to-be-eligible enrollees desire.
"Those older, modest income workers will be aging into Medicare eligibility faster," Wagar wrote. "And if your services are better for them from a health, care, cost and service perspective, you have a match."
Location can matter too. A recent Drexel University study found that rural Medicare Advantage enrollees were more than twice as likely to switch to traditional Medicare than urbanites, with complaints about network access the leading reason why members switched.
Meanwhile, in areas like South Florida, where over-utilization leads to high healthcare costs, Paul Ginsburg, director of the University of Southern Californa-Brookings Insitute Schaeffer Initiative for Health Policy, said Medicare Advantage insurers can look to implement managed-care as a way to lower healthcare costs, and further attract enrollees. In Miami, for example, Medicare Advantage enrollment is consistently above 60%.
"It's much harder in some areas where the unmanaged fee-for-service system is actually more efficient and doesn't have the excesses in the utilization," Ginsburg said.
While Medicare Advantage can lower healthcare costs, these savings are generally not seen in the federal treasury, according to Sungchul Park, an assistant professor at Drexel University. Companies generally invest the funds in additional benefits for members and lower premiums. Anthem, for example, credits its investments in the social determinants of health—like pest control, fitness products and an allowance for over-the-counter health and grocery items—for driving growth in its Medicare Advantage population.
Park believes these targeted benefits help Medicare Advantage insurers attract populations the healthcare industry has traditionally left behind, like racial and minority groups. He noted that Medicare Advantage plans can decide what benefits to offer at a county-level.
"Previously, the number of available Medicare Advantage plans was lower in counties with a higher proportion of racial-ethnic groups," Park said. "Over time, that number has increased. Compared to10 years ago, this year, they may have more options."
The federal government can also lose out on funds because private companies are generally more aggressive about risk-score coding than the government, according to Katherine Baicker, dean of the University of Chicago's Harris School of Public Policy. A January blog in Health Affairs estimated that CMS will overpay Medicare Advantage plans by $200 billion over the next decade if the coding intensity adjustment remains at its current levels.
"There are lots of mechanisms in place to try to match the payments to Medicare Advantage plans, to the overall health of the people they're enrolling, not to the overall health of the population," Baicker said. "But there is a concern that those can be mismatched."
For her part, Abburi challenged the accusation that CMS overpays medicare Advantage insurers like Cigna. She said the company works with its employer customers to educate aging workers about Cigna's Medicare Advantage plan, highlighting plan benefits like the free access to virtual physical therapy. For the newly-eligible who may still want to travel and not be tied to one primary care provider, Abburi said highlighting how managed-care improves members' overall health has been key in growing the business line 18% year-over-year.
"When people come in at the top of the funnel, they may not all be going into Medicare Advantage," Abburi said. "As they move through the age continuum, more and more are falling into Medicare Advantage."
