Report: Most health insurance advantage markets lack competition
A key goal of the Medicare Advantage program is to promote competition to improve health benefits and reduce costs for older people. However, a new report from KFF suggests that this may not have happened.
A report released on Monday found that in 2024, 79% of the U.S. counties are highly concentrated on Medicare Advantage, while 18% are very concentrated.
Additionally, 89% of Medicare Advantage participants are in a highly concentrated market, and in 2024, 4% are in a very concentrated market. About 90% of Medicare beneficiaries live in a program sponsored by one or two insurance companies, and at least half of Medicare Advantage Advantaires participate in half of Medicare Advantage.
“The Medicare Advantage insurance market has a higher market concentration and may reduce the incentive for insurers to compete for potential participants by making plans more attractive through more comprehensive benefits or lower costs,” the researchers said.
For the analysis, KFF examined publicly available county-level health insurance plan information and registration data in all 50 states, as well as in Washington, D.C. and Puerto Rico.
KFF also found that the Medicare advantageous market in rural counties is more concentrated. In 2024, about 39% of rural counties are very concentrated, while 6% of urban counties.
Additionally, UN Healthcare or Humans is the Medicare Advantage insurance company in more than half of the counties in 2024. United Healthcare is the largest Medicare Advantage insurer in 2024 in 41%, while Humana is 25% of Medicare Advantage insurer in all counties. Meanwhile, the Blue Cross Blue Shield program is the largest of 11% of counties, followed by CVS Health (8% of the county) and Heivance Health (4% of the county).
UnitedHealthCare and Humana have long been the two largest insurers in the Medicare Advantage market, together accounting for nearly 47% of national enrollment in 2024.
Researchers noted that while the Medicare Advantage market has become very concentrated, this is not the focus of recent times for policy makers or regulators.
“The latest federal level activity occurred in 2017, when the Justice Department blocked the merger between insurers Aetna and Humana, believing that experiencing this merger would significantly increase the market concentration of Medicare Advantage Market,” KFF said in the report. “Recently, conversations about health care competition have revolved around the consolidation of the provider market, especially hospitals and health systems.”
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