Medicare Advantage HMOs Remain Popular in 2021 Open Enrollment

October 13, 2020 - Medicare Advantage, specifically the Medicare Advantage health maintenance organization (HMO) option, is projected to be the most popular choice once again during open enrollment, according to Commonwealth Fund’s new Medicare Data Hub.

The data hub breaks down all of the data points to provide a comprehensive picture of the state of Medicare heading into open enrollment season.

Medicare Advantage

Medicare Advantage beneficiaries have increased their share of the total Medicare population over the past ten years. In 2010, only a quarter of Medicare beneficiaries were enrolled in a Medicare Advantage plan. By 2020, however, almost four in ten beneficiaries (37 percent) are Medicare Advantage plan members.

This should come as no surprise considering the fact that Medicare Advantage enrollment is now over twice what it was in 2010. In 2020, enrollment was at 24.7 million.

Enrollment draws mostly from the east coast, along with swaths of southern California, Nevada, and Arizona. The largest percentage of Medicare Advantage plan members live in Hawaii and Florida, with the lowest percentage in Alaska. Access to Medicare Advantage plans has improved nationwide.

Health maintenance organizations (HMOs) account for the largest amount of enrollment (15.2 million), a little less than twice the enrollment in preferred provider organization (PPO) enrollment. Private fee-for-service—which was never much of a contender during the past decade—has dwindled down to 0.1 percent of Medicare Advantage enrollment.

Perhaps this is not surprising, considering the cost-benefits.

Beneficiary cost-sharing varies across plan types. In 2021, HMOs and special needs plans will see the lowest premiums, with a mean of $23 per month for HMOs and $25 per month for special needs plans. Also, for 2021 HMOs have the lowest average in-network maximum out-of-pocket healthcare spending cap at $4,982.

While part B premiums are escalating, Medicare Advantage premiums overall dropped by 40 percent from 2010 to 2020, and 34.2 percent since 2017 alone.

In 2010, the average part C premium was $28. Along with the average part D premium of $13, this meant that the average beneficiary was paying around $42 per month for their Medicare Advantage plan. In 2020, however, that number is nearly halved at $25 total for the average premium—$12 for part C, $13 for part D.

Special needs plans are most likely to have the richest benefits, but most Medicare Advantage plans are investing in various new benefits like remote access technologies as well as temporary and extra benefits such as those for telehealth and meal delivery.

However, one area in which Medicare Advantage plans are sorely lacking is in support for caregivers and home services.

Meanwhile, chronic condition special needs plans can develop enhanced services for mental health, HIV/AIDS, dementia, and end-stage renal disease (ESRD), which may make up a slightly higher portion of the Medicare Advantage population this year due to the new ESRD rule.

Medicare Part D

In states where Medicare Advantage access is low, Medicare part D seems to fill the gap. However, the average part D premiums are more than twice what Medicare Advantage costs. Enrollment in these plans has stalled for the past five years, hovering around 25 million.

With 37 percent of Medicare enrollment, part D plans offer fairly high-quality care. Nearly every beneficiary in a stand-alone Medicare part D prescription drug plan will be in a plan that has received a rating of 3.5 stars or more from CMS.

Traditional Medicare

Overall, Medicare enrollment is expected to soar between 2021 and 2029, hitting 77 million enrollees by the near-end of the decade. This represents an increase of 1.5 million new enrollees each year across eight years, continuing the rapid escalation that started after 2006.

Similarly, Medicare spending could almost double in one decade, from 2019 to 2029. It could cost as much as 1.5 trillion. Although this would continue the general upward trend, the Medicare system would never have seen anything like this level of escalation in spending projected for the coming decade.

The largest share of Medicare spending (35 percent) goes toward capitated Medicare Advantage payments. Hospital inpatient care follows, consuming 19 percent of Medicare spending. The rest is decided between a diverse range of services, from home healthcare to Part D low income subsidies.

Medicare spending for each beneficiary will jump 60 percent in the decade between 2019 and 2029.

As for beneficiaries, costs will be increasing for them as well. Medicare beneficiaries can expect to see premiums  rise $100 over the 2017 premium, from $157.70 in 2022 to $234.10 in 2029.