What Medicare Advantage might look like in 2030: Part I

As the U.S. population grows older and healthcare spending rises as a percentage of GDP (now 20% of total output), here are some thoughts on what the Medicare Advantage landscape might look like in the year 2030. But first, let’s talk about the demographic trends that are steering our predictions. By 2035, it’s predicted that there will be 78 million Americans over the age of 65 or a little more than 20% of the U.S. population (compared that to just the 13% of the U.S. population today). Based on these demographic shifts and rising healthcare costs, Medicare spending is expected to double over the next ten years. And within Medicare, Medicare Advantage plans will continue to gain market share, expected to grow from 20 million members today to 38 million members by 2030. That would mean 50% of all seniors would be enrolled in a Medicare Advantage plan.

Supplemental Benefits

Increasingly, CMS is giving Medicare Advantage Plans the freedom to test new, innovative approaches to managing populations. In 2018, the CMS released guidance allowing Medicare Advantage Plans to offer Supplemental Benefits to their beneficiaries — benefits like transportation, in-home help, dietary/food programs and more. However, the guidance came so late that many MA plans failed to include these new supplemental benefits in their 2019 plans. Despite that, 2020 aims to be a big year for Medicare Advantage and the offering of innovative benefits that help address social determinants of health (environmental, social and physical factors that make up a person’s health). At the end of January, HHS secretary Alex Azar reinforced the government’s commitment to addressing SDOH, saying that plans will be able to offer any benefit that “improves or maintains the health of beneficiaries with chronic conditions and could lower cost-sharing." Those include services like meal deliveries, home modifications or transportation.

(In regards to how best to setup a transportation benefit, see our slide deck from our talk at HIMSS here)

Value Based Care

We’re also predicting a proliferation of value-based care programs and more payer-provider partnerships that serve patients on an “at risk” basis. In 2017, HHS reported that the percentage of healthcare payments tied to value-based care is on the ride — reaching 34% in 2017, up from 23% in 2015. Further, individual MA plans like Humana are already reporting some great results from switching from fee-for-service to a value-based care model. For Seniors enrolled in Humana Medicare Advantage plans, medical costs were found to be nearly 16% lower for members tied to value-based plans vs. members of fee-for-service models. Based on the effectiveness of value-based care and the increasing membership in Medicare Advantage, we can expect to see a steady rise in value-based care payments, programs and payer-provider relationships.

Technology-enabled solutions part I: addressing loneliness 

There are myriad use cases for how MA plans can use technology to better care for their members. Just this weekend, the Wall Street Journal featured an article about technology that helps address loneliness, a problem that costs Medicare $6.7M annually. New apps and businesses are coming to market to address the problem, such as an app that seniors can use to call “grandchildren on demand” or college students who show up for shopping chores and chit-chat. Therapeutic robots will also become more mainstream. For instance, ElliQ is a small robot that is capable of basic gestures and spontaneous communication ranging from basic chit-chat to medication reminders. This is one example of how technology can solve public health challenges and we can expect to see MA plans leading the way to bring these innovations to Seniors.

This is part one of a three-part series on the future of Medicare Advantage. Check back in March for Part II.