One theme we have watched closely as part of our theme on the Insured Medical Consumer Model has been the rapid shift of Medicare PDP members to Medicare MA-PDP. The most abrupt change came in 2021 as changes to the Medicare Part D benefit design got serious and ultimately were included in the Inflation Reduction Act. However, annual declines in stand-alone PDP enrollment persist at around 4% YoY based on the most recent enrollment data.
There are no doubt some incentives designed to accelerate the shift like supplemental benefits, the termination of drugs plans, leaving few options, and of, course, lower premiums. There is no question the strategy is a good one for MCOs. While we do not anticipate that the MCOs will be able to penetrate every nook and cranny of the vast American continent, the shift away from PDP plans into MA-PDP plans can still make strides in urban, suburban and certain rural areas.
If penetration of MA-PDP exceed 50-55% in urbanized parts of this country, what does it mean for traditional Medicare? An immediate problem will be how best to determine benchmarks as the traditional population gets scarcer. Another will be the political blow-back from edges of the political spectrum that view Medicare Advantage as privatization, something that is anathema to progressives.
The irony, of course, is that Congress itself has forced the change through the Medicare Part D redesign. Those changes include requiring Part D plan sponsors to assume 20% of costs in the catastrophic threshold, rising to 60% in 2025, versus 15% in 2023. That liability requires higher visibility into the diagnosis and care of patients, something accomplished by enrolling them in an MA-PDP plan.
Open enrollment should accelerate this trend for 2024.
Emily Evans
Managing Director – Health Policy
Twitter
Book a meeting on Calendly here.
