How start-up insurers are capturing Medicare Advantage market share

Ari Gottlieb, principal at A2 Strategy Group, said Alignment, Bright Health Group and other insurers with significant operations in California were affected by rival SCAN Health Plan’s aggressive benefit design during the annual enrollment period. The for-profit player’s Medicare Advantage membership grew 16.8% sequentially to 258,028 and expanded from California to Arizona and Nevada this year. “SCAN has been a consistent performer and has always been in the market,” Gottlieb said. “They have new leadership who clearly have broad ambitions and ambitions and have shown a willingness to be aggressive and practical to implement those goals.”

clover healthLikewise, its membership increased by 18% to 80,238 during the period. According to a Bank of America report, more than 90 percent of Clover’s new members come from registrants who switched from UnitedHealth Group, Humana, and CVS. The Medicare Advantage-focused insurer’s enrollment growth “somewhat validates its benefit design (though it’s not yet profitable),” the report said. President Andrew Toy said most of the company’s registrants are now concentrated in Georgia and New Jersey, both of which have high rates of COVID-19, which translates into higher-than-expected medical costs .

“For us, it just came down to, ‘How much money do we need to drive a potential wave of COVID?'” Toy said. “Until it becomes endemic, then the government will adjust the plan, or, hopefully, the wood is finalized and a vaccine gets us into a good place after this wave.”

The company has been focusing on a broad network strategy and argues that its AI-driven technology platform ensures quality patient care from any provider it visits. The company pays physicians an average of $200 per visit to use its technology, and clinicians don’t need to contract with insurtech to use its software. Over 60,000 suppliers are part of its network.

One reason insurers may struggle to attract new members this year is that listing prices on online brokerage sites such as eHealth have risen, he said.

“The price of potential customers and growth in the industry has gone up a lot,” Toy said. “For any program that relies heavily on those channels, I think this has led to a challenging year.”

But Gottlieb said the company’s growth may be due to aggressive benefit design. He noted that smaller insurers such as Clever Care were also able to achieve extraordinary growth during the annual registration period, but expressed doubts about the sustainability of their business. In the first three quarters of 2021, Clever Care, a Medicare Advantage plan specifically for Asian Americans, lost $12 million on fewer than 2,000 members, according to filings with the California Department of Health Care. Gottlieb wonders if Clever Care and other programs will suffer Bright Health Group Earlier this year, when Cigna stepped in to bail out the cash-starved startup for $550 million. At the time, analysts said Cigna’s investment in Bright showed that the traditional insurer didn’t see the startup as a competitor.

“Health insurance is a huge consumer of capital, and you need to be able to support that,” Gottlieb said. “What would you do and how would you scale back your thinking about the future if capital markets were effectively closed to you? In some ways, more rational behavior might benefit larger players who have the capital and time to wait for it to end. .”

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