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Competition lacks in Medicare Advantage market

There is little or no competition among Medicare Advantage insurance markets in the U.S., according to a Commonwealth Fund report published online in August.

Researchers examined the degree of MA market competition in 2,933 U.S. counties. While a high level of competition can hold down program spending, researchers found little or no competition in 97% of the counties. Of 100 counties with the greatest number of Medicare beneficiaries, 81 lacked significant competition.

“Allowing private health insurers to play a larger role in Medicare is often suggested as a way to control Medicare costs and improve quality of care,” Stuart Guterman, senior scholar in residence at AcademyHealth and co-author of the study, said. “The idea is if there are more insurers, they’ll fight for customers by lowering premiums and improving quality. For that to happen, however, we need to have enough insurers in a given market—and this study shows that, overwhelmingly, that isn’t the case.”

Results showed only one county in Riverside, Calif., barely qualified as a competitive market, and 80 counties qualified as moderately competitive.

“Our analysis of Medicare Advantage plan market shares for 2012 indicates there is little competition anywhere in the nation,” researchers wrote in their report, “Competition Among Medicare’s Private Health Plans: Does It Really Exist?”  “These counties accounted for 47 percent of MA enrollees and 38 percent of beneficiaries nationwide.”

Forecasted challenges

The report suggests lack of competition in local markets among private plans could create challenges for reform proposals that rely on competition among such plans to improve the efficiency and quality of the Medicare program.

Specific results showed that while both urban and rural MA markets lacked significant competition, rural counties were the least competitive. Six insurers dominated the markets in the 100 counties with the most Medicare beneficiaries.

UnitedHealth had the greatest number of MA enrollees in 38 counties; Blue Cross affiliates had the greatest enrollment in 13 counties; Humana in 12; Kaiser Foundation Health Plan in nine; CIGNA in five; and Tufts Health Plan in five.

“Millions of Americans rely on Medicare and Medicare Advantage, and their ranks will grow exponentially as baby boomers turn 65,” Commonwealth Fund President David Blumenthal, MD, said in a news release. “Now is the time for us to focus on viable ways to strengthen Medicare, but this research suggests the need to critically examine, using empirical studies, the likely results of all proposals for Medicare reform, including those relying on market forces.”

While the trend toward greater consolidation of market power among both providers and payers has raised concerns, authors stated they were not surprised by their findings as they are consistent with analyses conducted by the American Medical Association and Government Accountability Office.


By | 2021-05-07T17:36:11-04:00 October 13th, 2015|Categories: Nursing News|0 Comments

About the Author:

Special Topics Editor Deborah Filipek develops and edits content for OnCourse Learning’s blog, which covers news, trends and features relevant to nurses. She has more than 25 years of writing and editing experience, having previously worked for weekly newspapers and ad agencies in the Chicagoland area.

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