Medicare Advantage (MA) continues to emerge as one of the most desirable products to beneficiaries, as evidenced in current and projected enrollment figures. This year was one of the largest federal reimbursement increases that the MA industry has seen in over a decade, and Forbes summarized the results well: geography and product expansion, new entrants, richer benefit designs and more competition overall. Given bipartisan political support, we expect to see these trends increase.
The broader health care industry has also noticed MA’s success. We’re seeing mergers and acquisitions at an unprecedented rate as larger insurance entities buy into the MA space. There’s also increased alignment with provider networks and hospital systems as plans jockey for competitive advantages. Since MA plans are obligated to invest the majority of reimbursement on benefits, coverage options are often similar among competitors, leaving advantages to be sought elsewhere.
We believe that one of the biggest advantages and differentiators that plans may be overlooking is member experience. The baby boomer generation aging into Medicare are savvy consumers accustomed to shopping and customer service experiences from companies like Apple, Amazon, Costco, and Netflix. In MA, the shopping, enrollment and subsequent member service interactions can still be frustrating. Forward-looking plans are scrutinizing member experience, but many remain stagnant. In our opinion, it’s an investment in talent, infrastructure, and company culture that plans can’t afford to overlook. The article also mentions startups, which is something we follow closely. New entrants are free from the burden of transformation, so it’ll be interesting to see how these players approach a market that’s prime for disruption.
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