Medicare Advantage Dominance: A deep dive into Market Concentration
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Medicare Advantage (MA) plans, a private insurance choice too conventional Medicare, are increasingly dominating the healthcare landscape for seniors. While offering a range of benefits, the growing market share of a few major insurers raises questions about competition and beneficiary choice. This analysis, drawing on data from the Centers for Medicare & Medicaid Services (CMS) and KFF, explores the concentration of medicare Advantage markets across the United States, highlighting counties were a single insurer holds a significant majority of the market.
The Rise of Medicare Advantage
Medicare Advantage plans have seen a steady increase in enrollment over the past two decades. These plans, offered by private companies approved by Medicare, frequently enough include prescription drug coverage and additional benefits like dental, vision, and hearing care, which can be attractive to beneficiaries. As of 2024, a significant portion of Medicare beneficiaries are enrolled in MA plans, a trend that continues to grow.
Understanding Market Concentration: The Herfindahl-hirschman index (HHI)
To gauge the level of competition within Medicare Advantage markets, KFF utilizes the Herfindahl-Hirschman Index (HHI). This economic tool measures market concentration by summing the squares of the market share of each firm in a given market.
How HHI Works: An HHI score ranges from 0 to 10,000. A score closer to 10,000 signifies a highly concentrated market with limited competition,akin to a monopoly. As an example, a market where two insurers each hold 50% of the market would have an HHI of 5,000 (50² + 50² = 5,000).Conversely, a market with many insurers, each holding a small share, would have a much lower HHI.
this index is crucial for understanding how many choices beneficiaries truly have when selecting a medicare Advantage plan in thier county.
Our analysis reveals specific counties where a single insurer commands a substantial portion of the Medicare Advantage market, often exceeding 50%. This concentration can impact pricing, benefit offerings, and the overall competitive environment.
UnitedHealthcare’s Dominance in Key Counties
unitedhealthcare, a major player in the Medicare Advantage market, holds a dominant position in several large counties across the nation. In these areas, over half of the eligible Medicare beneficiaries enrolled in Medicare Advantage have chosen a UnitedHealthcare plan.
The implications of such high market share for UnitedHealthcare in these counties are significant, possibly influencing the competitive landscape and the range of options available to beneficiaries.
Humana’s Strong Presence in other Regions
Similarly,Humana demonstrates a strong market presence in other counties,with its Medicare Advantage plans being the preferred choice for over 50% of enrolled beneficiaries in those areas.
The concentration of market share by insurers like humana in these counties warrants attention as it shapes the choices available to Medicare beneficiaries.
Geographic Distribution of Market Concentration
The concentration of Medicare Advantage markets is not uniform across the country. The type of county-weather urban,rural adjacent to urban areas,or rural non-adjacent to urban areas-can influence market dynamics.
Urban Counties: generally tend to have more diverse markets with a greater number of competing plans due to higher population density and potentially greater insurer interest.
* Rural Counties: Can sometimes face challenges with market competition, potentially leading
