Key Players and Business Models
Medicare Advantage (MA) provides beneficiaries with health plans covered by Medicare-approved private companies. In Los Angeles, CA, the key players are Humana, UnitedHealthcare, Blue Cross Blue Shield, CVS Health, Centene, Cigna, and Kaiser Permanente (Freed et al., 2021b). Six large health systems account for half of the total market, but the market share of each system does not exceed 11% (Yegian & Connolly, 2021).
Major business models in MA in Los Angeles are the partial and complete downside risk, with the full risk being used by UnitedHealthcare and Humana (Galewitz, 2018). In particular, a part of UnitedHealthcare called Optum has full-risk contracts with about a half million people in Los Angeles (Yegian & Connolly, 2021). Insurance companies also employ or are affiliated with physicians and integrated physician organizations; for example, Optum employs more than 7,000 physicians in Los Angeles (Yegian & Connolly, 2021). Physicians take clinical responsibility and risk through fixed per-person per-month payments called capitation.
The Impact and Drivers
MA’s impact can be assessed in the number of people enrolled in the plans. In Los Angeles, 50.5% of people were enrolled in MA plans in 2019 (Yegian & Connolly, 2021). Furthermore, the share of people enrolled in special needs plans are increasing (Freed et al., 2021a). These outcomes are driven by such factors as federal reimbursement, Medicare population growth, decreased employer-sponsored retiree insurance, ease of entering the MA business, and the growth of SNPs (Blum & Hsieh, 2020). Although patients are mostly satisfied with the coverage, they may sometimes be losers because of such issues as high deductibles, limited provider networks, and surprise medical bills (Pollitz et al., 2019). The winners in the market are healthcare providers included in the network and insurance companies.