This is an AArete Healthcare Payer insight

The sustained financial pressures that Medicare Advantage (MA) health plans are facing – due to increased utilization, rate cuts, Star Ratings, and changes to risk adjustment – will persist throughout the foreseeable future. That means health plans must take a consistent, thoughtful approach to sustaining their business by managing costs without compromising member access to quality healthcare.

Striking that balance will be imperative as MA enrollment continues to rise. This year marks “Peak 65,” a noteworthy demographic milestone where the number of Americans turning 65 years old – about 11,200 per day – hits the high-water mark. Those individuals will be required to decide which Medicare plan they want. These days, more people are opting for MA over traditional Medicare because many plans offer lower out-of-pocket cost limits, attractive supplemental benefits (dental and vision coverage, gym membership), and for some plans, $0 monthly premiums.

MA has become the preferred healthcare option for seniors. In January, KFF reported that “for the first time in Medicare’s history,” a majority of Medicare-eligible people (53% or 30.8 million individuals) enrolled in an MA plan. That percentage is expected to steadily increase, from its current level to 62% in 2033, according to forecasts by the Congressional Budget Office. Those individuals will increasingly require more frequent and costlier healthcare services.

During shareholder conference calls to review fourth quarter 2023 financial results, CEOs at some of the largest health insurance companies cited the pressure that higher medical utilization expenditures was putting on MA plans’ operating margins. That cost pressure has continued into 2024 and will likely persist for the rest of the year – and beyond – due to a variety of factors.

AArete Managing Director Paul Schuhmacher has written a guest article for MedCity News in which he outlines four strategies that Medicare Advantage plan leaders should focus on to mitigate the effect of revenue and cost pressures.

Read Paul’s full article here: https://medcitynews.com/2024/06/four-strategies-medicare-advantage-plans-can-implement-to-mitigate-financial-pressures

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