Payers Will Need to Shift Strategies as Medicare Advantage Boom Slows

Aug 03
Aug 03, 2023

Medicare Advantage enrollment growth has exploded in recent years, topping 31 million lives as of July 2023, according to AIS’s Directory of Health Plans. But a new analysis from McKinsey and Company warns this free-for-all won’t last forever, and payers will have to adjust their strategies and evolve to meet a changing market.

The consulting firm estimated that annual growth in MA membership will slow to 3% in 2031, a far cry from the 8% rate seen in 2022. That’s largely because MA’s market strongholds — which McKinsey says are primarily urban — will become too saturated over time. While 2023 marked the first time more than 50% of seniors were enrolled in MA, actual MA penetration rates vary widely depending on region. McKinsey found that the 50% figure holds true for urban (or metropolitan) areas, but nonmetropolitan areas lag behind at 41%. McKinsey projects nonmetropolitan areas won’t reach 50% penetration until 2031, presenting opportunities for payers to shore up untapped markets. “Payers will seek to build the networks and capabilities to grow in historically less penetrated markets, such as those with large rural populations,” analysts wrote. Those markets could include entire states — McKinsey noted that CMS’s June data release showed a 59% penetration rate in Michigan, while Wyoming’s was just 13%.
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Carina Belles

Carina has been covering public-sector health care since 2018. As a data reporter for Radar on Medicare Advantage, she creates infographics and data stories on issues impacting Medicare, Medicaid and Part D. She also develops AIS Health Daily, a free daily newsletter that showcases AIS’s strong reporting across our four publications and parent company Norstella’s suite of market access and data solutions. Prior to joining the editorial team, she managed Medicare and Medicaid data for the Directory of Health Plans, AIS’s industry-standard health coverage database. She graduated from Ohio University with a B.S. in Journalism.