Medicare Advantage plans embrace riskier patients

State of play: Open enrollment for 2026 Medicare coverage — including the Medicare Advantage plans that now cover more than half of seniors — began last week.

• The number of plans offered declined in 35 states, and the overall number of standard plans is down 9% from last year, with major players like Aetna and UnitedHealthcare shrinking their footprints.
• Some insurers like Ochsner Health Plan and Blue Cross Blue Shield of Vermont exited the MA market entirely.

The companies partly blame changes the Biden administration made to the way they get paid, as well as rising costs driven by higher demand for medical services.

• "The combination of funding cuts, rising health care costs and increased utilization have created headwinds that no organization can ignore," Bobby Hunter, who runs government programs for UnitedHealth's parent, said during a press call this month.

Yes, but: Plans targeting enrollees with chronic illnesses will increase 42% this coming year, according ATI Advisory.

• Chronic condition special needs plans, or C-SNPs, are Medicare Advantage offerings only available to seniors diagnosed with specific diseases or disabilities. Enrollment in these plans has increased in recent years, attracting seniors with additional benefits and more coordinated care.
• It's part of a broader trend in which the greatest-needs population is driving insurers' revenue growth. Health plans also are catering to low-income people with complex health needs who are eligible for both Medicare and Medicaid. Those offerings are expected to increase 15% next year.

How it works: Because the government pays Medicare Advantage insurers more to take on on sicker enrollees, these specialized plans tend to have higher profit margins.

• The plans cover the same benefits as regular MA insurance, including drugs. They also pay for services like extra days in the hospital for someone with cancer or congestive heart failure. Many have no monthly premium, which is also common among standard MA plans.
• "Plans have figured out that by tailoring benefits to these populations, they can attract people and do it in a financially beneficial way for their companies," said Jeannie Fuglesten Biniek, associate director of KFF's program on Medicare policy.

The intrigue: About half of the explosive growth in C-SNPs for next year is driven by new plans from Devoted Health, a Medicare Advantage startup that's leaned heavily into the sector over the past few years, Modern Healthcare reported.

• The organization did not respond to Axios' questions about why it's doubling down on chronic care plans. Large insurers like UnitedHealth Care and Aetna also administer C-SNPs.

Zoom out: The Centers for Medicare and Medicaid Services projects that Medicare Advantage enrollment could fall by about 900,000 next year as more insurers withdraw from markets. It expects premiums and benefits to remain stable.

• It's hard to know if the market shifts would have happened even without reimbursement policy changes over the past couple of years, as the MA market is reaching a stage of maturity, KFF's Biniek said.
• "We see a slight contraction, but to me that doesn't actually signal that there's less choice," she said. "I think insurers are being a little more strategic about the set of choices they're making available."

What we're watching: Brokers often shy away from these products because they can't be sure an enrollee will qualify, or get the necessary doctor's note to prove their eligibility, said Vijay Kotte, CEO of Medicare brokerage service GoHealth.

• "A consumer has got to ask for the product they want or find a broker who they know is going to give them a good selection of plan options," Kotte said.