Medicare users stepped up their use of Medicare Advantage insurance plans in 2012 and also boosted their use of insurance plans linked with large pharmacy chains for what's called stand-alone prescription drug plans (PDPs). In these respects, the 2012 open enrollment process was a success for the government, and showed that large numbers of Medicare users were willing to switch coverage to find health plans they felt were better for them.
This year's favorable price trends may not continue. Provisions of the Affordable Care Act (ACA) could sharply cut payments to participating Medicare Advantage insurers in a few years, possibly leading to less-favorable coverage and premiums. And the ACA itself is on uncertain footing because of constitutional challenges now before the Supreme Court. But for now, the news on Medicare Advantage is mostly good.
The plans cover all basic Medicare expenses and most also include prescription drug coverage. The U.S. Department of Health and Human Services, which oversees Medicare, announced last week that enrollment in Medicare Advantage plans rose 10 percent over last year, even as rates have fallen by 7 percent. Medicare has been reducing the repayments it is willing to provide to private Medicare Advantage insurers. Even so, it says there was still lots of interest by insurers to offer the plans.
"Average premiums have fallen from $33.97 in 2011 to $31.54 in 2012," HHS said, "while enrollment has risen from 11.7 million in 2011 to 12.8 million in 2012." Since 2010, it added, Medicare Advantage premiums have been cut 16 percent and enrollments are up 17 percent.
Among Medicare Advantage insurers, here are the five largest insurers in 2012 based on their share of the total Medicare Advantage market. The numbers come from an analysis of Medicare open enrollment information by Avalere Health, Washington, D.C.-based healthcare consultants.
1. UnitedHealth Group: 19 percent market share
2. Humana: 17 percent
3. Kaiser: 8 percent
4. WellPoint: 5 percent
5. Aetna: 3 percent
At the same time, Avalere said, PDP enrollments outside employer health plans also rose 3 percent for 2012 plans, to 17.5 million Medicare participants from 17 million in 2011 plans. According to Avalere, the big news in PDPs was the rise of plans in which insurers have teamed up with large pharmacy chains. Taking advantage of lower drug costs within these preferred pharmacy networks, such plans were able to keep premiums down for Medicare consumers.
Historically, Medicare consumers have resisted changing from the original insurance plans they selected when first becoming eligible for Medicare. Results from 2012 open enrollment decisions tell a different story. "There is at least a segment of the population that is actively seeking new plans and is willing to switch," says Bonnie Washington, a senior vice president at Avalere.
Shifts among PDP plans were also driven by 2012 premium levels in the biggest such plan, insured by UnitedHealth and branded as an AARP plan. Washington explained that its premiums came in higher than government benchmarks that had permitted low-income consumers to sign up for the AARP plan and pay no premiums. "There were many other choices in the market to get coverage with no premiums," she says. More than half a million people left the AARP plan, and its total enrollment fell 12 percent.
Among the preferred pharmacy plans, Avalere says, enrollments were up 66 percent in the Humana Walmart Preferred Rx Plan, and enrollments jumped 114 percent for the CVS Caremark Value plan. Its numbers were up, in part, because CVS has been expanding by acquiring other PDP insurance plans. "I think we'll see more of these preferred pharmacy agreements," Washington says.
Here are the 10 largest PDP plans and their enrollments in 2011 and 2012:
|Plan Enrollment for Top 10 PDPs, 2011-2012|
|Plan Name||Enrollments||Enrollments||% change|
|AARP MedicareRX Preferred||4,565,805||4,021,398||-12|
|Community CCRx Basic||1,719,489||1,813,954||5|
|Humana Walmart-Preferred Rx Plan||835,690||1,391,148||66|
|CVS Caremark Value||623,617||1,335,022||114|
|First Health Part D Premier||1,056,737||994,083||-6|
|CIGNA Medicare Rx Plan One||505,753||577,930||14|
|HealthSpring Prescription Drug Plan||424,946||468,540||10|
|Medco Medicare Prescription Plan - Value||362,146||432,905||20|
|Source: Avalere Health|