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Medicare Supplement Market Results - Part ✌
2023 Med Supp Results by State and Plan Type
Jared Strock & Andrew Ryba
June 13, 2024
This week’s newsletter is Sponsored By: Telos Actuarial’s NEW 14th Annual Market Projection (White Paper)!
Download the FREE 2024 White Paper here → (link)
Here is what you’ll find in this week’s newsletter!
Important links 🔗 - the best articles we found this week about the Medicare Market along with links to Jared’s recent LinkedIn posts.
Deep Dive 📚 - Medicare Supplement Market Results - Part ✌
Compliance Chatter 📢 - Dental Loss Ratio Requirements
Sponsor Snapshot 🚀 - brought to you by Telos Actuarial’s NEW 2024 White Paper - The Future of Medicare Supplement
It’s only a 5 minute read, but it will make you 10x smarter.
Here are IMPORTANT LINKS 🔗 for the week:
Humana and CVS are downsizing their Medicare Advantage plans for 2025. Which issuers could benefit? - (link)
Elevance Health earns partial win in legal fight over MA stars - (link)
Medicare Beneficiary Spending 2024 - Better Medicare Alliance - (link)
Biden Plan to Save Medicare Patients Money on Drugs Risks Empty Shelves, Pharmacists Say - (link)
Supreme Court to decide Medicare reimbursement issue - (link)
Medicare Supplement Plan G Average Premiums Over Time - (link)
Jared’s recent LinkedIn posts:
I asked Medicare distributers to share their favorite KPIs. Here is the list: - (link)
UNH, ELV, HUM, CVS & CI all report “Revenue Eliminations” each quarter. What are they?… - (link)
Why is BCBS of KC exiting the MA market at the end of 2024? Here is part of the story: - (link)
MA enrollment grew ~11,000 during AEP in Louisiana. Up 2.2%. - (link)
DEEP DIVE 📚
Medicare Supplement Market Results - Part ✌
A few weeks ago, we provided a first look at the experience that was reported to the National Association of Insurance Commissioners (NAIC) through the Medicare Supplement Insurance Experience Exhibit (MSIEE).
That Deep Dive looked at the high level results for both the “New Business” and “Seasoned Business” segments of the market. It covered Earned Premium and Covered Lives growth rates plus it examined how Loss Ratios have progressed over recent years.
As a quick recap, here is how the Total Market has fared from 2021 to 2023. You’ll see that Earned Premium has increased by about $1.1 billion while Covered Lives have decreased by 470,000 and over this time the Loss Ratios have risen from 77.3% to 83.9%, an increase of 6.6%.
Premiums | Claims | Loss Ratio | Lives | |
2021 | $34,256,800,000 | $26,490,600,000 | 77.3% | 14,080,000 |
2022 | $34,807,300,000 | $27,996,100,000 | 80.4% | 13,790,000 |
2023 | $35,342,900,000 | $29,643,100,000 | 83.9% | 13,610,000 |
One key thing to remember about the Medicare market is that each state has its own nuances and can be thought of as its own market.
There are differences in the size of the senior population and the carriers that are licensed to operate in the state. And since the Medicare Supplement market is regulated at the state level, there are drastically different rules that affect how companies compete. Tactics that help you successfully operate in Texas will not have the same impact in New York!
Okay – with that as our backdrop, let’s look at some more Med Supp statistics!
Medicare Supplement Penetration Rates
The first set of statistics that we want to share are the Market Penetration Rates by state.
Here we will define the penetration rate as:
[# of Medicare Supplement Lives] / [# of Medicare Beneficiaries]
A couple of quick details about the inputs:
The MSIEE provides data on the number of inforce policies as of December 31st. This will be the numerator in the penetration rate calculation.
CMS releases monthly files that contain data on the number of Medicare Beneficiaries and their enrollment status. We will use the December files to get the most directly comparable data point to serve as our denominator.
Using this calculation method, the nationwide penetration rate is 20.8%.
Note that this only includes companies that submit data to the NAIC through the MSIEE and will understate the penetration rate for California since two large companies report their results to the Department of Managed Healthcare.
This map shows the Medicare Supplement penetration rate by state. States with a darker blue shading have a higher penetration rate than the lighter green states.
Key Take-Aways:
States with the highest penetration rates: Wyoming (47%), Nebraska (45%), Iowa (43%), Kansas (43%), Montana (38%), South Dakota (37%), North Dakota (35%), and Illinois (31%). These states are all located in the Midwest.
States with the lowest penetration rates: Hawaii (4%), California (9%), New York (12%), Washington D.C. (12%), Maine (15%), Alabama (15%), New Mexico (15%) and Louisiana (16%). These states are geographically spread out across the country.
There are 27 states that are within 4% of the 20.8% national average. Despite the outlier states listed above, the majority of states have very similar penetration rates.
You can download a free pdf that shows the beneficiary and coverage data here.
New Business Results by State and Plan
Now we are going to take a deeper look at the 2023 New Business experience results.
Note: “New Business” = issued 2021 - 2023
This next table shows the experience results by Issue State. Results for the ten states with the highest reported Lives are shown individually and the remaining states (plus Washington D.C.) are aggregated into the ‘All Others’ line.
Issue State | Premium | Loss Ratio | Lives | % of Total | Avg Premium |
TX | $492,000,000 | 93.0% | 329,000 | 8% | $1,495 |
IL | $427,000,000 | 98.4% | 258,000 | 6% | $1,655 |
FL | $463,000,000 | 70.1% | 216,000 | 5% | $2,144 |
PA | $289,400,000 | 91.4% | 192,000 | 5% | $1,507 |
CA | $322,600,000 | 89.8% | 174,000 | 4% | $1,854 |
OH | $245,800,000 | 87.4% | 168,000 | 4% | $1,463 |
MN | $512,300,000 | 78.7% | 162,000 | 4% | $3,162 |
NC | $184,800,000 | 95.5% | 138,000 | 3% | $1,339 |
NJ | $247,000,000 | 88.2% | 138,000 | 3% | $1,790 |
NY | $327,900,000 | 88.5% | 131,000 | 3% | $2,503 |
All Others | $3,597,000,000 | 92.4% | 2,250,000 | 54% | $1,599 |
Total | $7,108,800,000 | 89.8% | 4,156,000 | 100% | $1,710 |
Some observations about these results:
The Top 5 states account for 28% of the total New Business Lives
Loss Ratios for four of the Top 5 states are at least as high as the nationwide average.
Average Premiums in Florida, Minnesota and New York are significantly higher than the nationwide average. This is due to the unique Med Supp rules in these states.
The next table shows New Business experience results by Plan.
Results for the plans with the highest reported Lives are shown individually and the remaining plans are aggregated into the ‘Other Plans’ line. The ‘Waiver States’ include business issued in MA, MN and WI that had implemented their own version of standardized plans prior to the national requirement in 1990.
State | Premium | Loss Ratio | Lives | % of Total | Avg Premium |
Plan G | $4,287,300,000 | 91.0% | 2,680,000 | 64% | $1,600 |
Plan F | $1,012,700,000 | 92.8% | 473,000 | 11% | $2,141 |
Plan N | $680,400,000 | 82.9% | 470,000 | 11% | $1,448 |
Waiver States | $833,700,000 | 83.9% | 345,000 | 8% | $2,417 |
Plan C | $73,300,000 | 100.5% | 59,000 | 1% | $1,242 |
Plan A | $47,000,000 | 86.8% | 28,000 | 1% | $1,679 |
Plan D | $41,400,000 | 117.3% | 23,000 | 1% | $1,800 |
Plan K | $30,500,000 | 76.8% | 21,000 | 1% | $1,452 |
Plan L | $7,500,000 | 73.5% | 4,000 | 0% | $1,875 |
Other Plans | $95,000,000 | 90.7% | 53,000 | 1% | $1,792 |
Total | $7,108,800,000 | 89.8% | 4,156,000 | 100% | $1,710 |
Some observations about the results by plan:
Plan G is the most popular plan and accounts for nearly two-thirds of the New Business Lives.
Plan F continues to generate moderate sales volumes after the implementation of the MACRA plan eligibility rules changes[i].
Loss Ratios on Plan K, Plan L and Plan N are lower than other plans. This is due to the additional cost-sharing that these plans impose and the associated positive selection.
Seasoned Business Results by State and Plan
The last section of this week’s Deep Dive will cover the 2023 experience on Seasoned Business.
“Seasoned Business” = Issued prior to 2021
This table shows the experience results by Issue State. Same set-up as the table above.
Issue State | Premium | Loss Ratio | Lives | % of Total | Avg Premium |
FL | $2,140,900,000 | 86.4% | 714,000 | 8% | $2,998 |
TX | $1,909,700,000 | 81.2% | 620,000 | 7% | $3,080 |
IL | $1,616,300,000 | 81.5% | 498,000 | 5% | $3,246 |
PA | $1,363,800,000 | 81.2% | 489,000 | 5% | $2,789 |
OH | $1,226,600,000 | 80.0% | 435,000 | 5% | $2,820 |
CA | $1,293,000,000 | 84.6% | 425,000 | 4% | $3,042 |
NJ | $1,127,300,000 | 85.3% | 365,000 | 4% | $3,088 |
NY | $1,161,700,000 | 82.5% | 335,000 | 4% | $3,468 |
NC | $947,100,000 | 80.1% | 327,000 | 3% | $2,896 |
VA | $870,900,000 | 77.8% | 312,000 | 3% | $2,791 |
All Others | $14,576,700,000 | 82.3% | 4,937,000 | 52% | $2,953 |
Total | $28,234,000,000 | 82.4% | 9,457,000 | 100% | $2,986 |
Some observations about these results:
Nine of the Top Ten states were also in the New Business Top Ten. The exception is Virginia stepping in and taking Minnesota’s place.
In general, Loss Ratios on Seasoned Business are lower than on New Business. Florida is a notable exception where the Seasoned Business Loss Ratios are 16.3% higher than the New Business Loss Ratios. This is expected based on the rating rules and the expected loss ratio patterns.
Average Premiums on Seasoned Business are 75% higher than New Business premiums.
This final table shows the Seasoned Business experience results by Plan.
State | Premium | Loss Ratio | Lives | % of Total | Avg Premium |
Plan F | $14,965,600,000 | 79.3% | 4,465,000 | 47% | $3,352 |
Plan G | $5,737,700,000 | 87.5% | 2,393,000 | 25% | $2,398 |
Plan N | $1,997,000,000 | 84.7% | 854,000 | 9% | $2,338 |
Waiver States | $1,428,100,000 | 85.5% | 478,000 | 5% | $2,988 |
Plan C | $1,245,200,000 | 83.8% | 347,000 | 4% | $3,588 |
Plan A | $394,600,000 | 82.5% | 124,000 | 1% | $3,182 |
Plan D | $251,200,000 | 85.4% | 83,000 | 1% | $3,027 |
Plan K | $59,000,000 | 88.8% | 48,000 | 1% | $1,229 |
Plan L | $48,200,000 | 83.6% | 23,000 | 0% | $2,096 |
Other Plans | $2,107,400,000 | 84.5% | 642,000 | 7% | $3,283 |
Total | $28,234,000,000 | 82.4% | 9,457,000 | 100% | $2,986 |
Some observations about the results by plan:
Plan F shows up as the most widely held Med Supp plan. Historically, it was the most popular plan due to its wide availability and comprehensive coverage. It lost some appeal as its premiums grew faster than Plan G premiums plus the Part B Deductible amount (this is the only coverage difference between the two plans).
Plan K’s Average Premium is lower on the Seasoned Business segment than on the New Business segment. Average Claims (not shown) are similar, so the Loss Ratios on Seasoned Business are materially higher.
The Other Plans segment includes large blocks of Plan J, Plan B and Pre-Standardized plans. Experience on Plan B and the Pre-Standardized blocks are similar (84% loss ratios, average premium around $2,800) but Plan J has significantly higher premiums ($3,800) and similar loss ratios (85%).
That is all for this week. We’ll continue to share Medicare Supplement experience information over the coming weeks.
Let us know (just hit reply in your email) what other data points that you want to see.
___
[i] MACRA legislation in 2015 prohibits carriers from issuing first dollar Medicare Supplement coverage (essentially Plans C & F) to ‘newly eligible beneficiaries’ beginning on January 1, 2020.
Sponsor Snapshot 🚀: Telos Actuarial’s 2024 White Paper is published!
The Future of Medicare Supplement ~ 14th Annual Market Projection Digital Report is available for FREE now. Download (here)!
Telos helps insurance carriers develop and launch new product for the 65+ market.
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COMPLIANCE CHATTER 📢
Stand-alone dental plans are often sold to seniors to supplement Medicare benefits. Several states have proposed and/or enacted legislation that provides dental loss ratio requirements and requires loss ratio reports to be filed with the state.
The following states have recently enacted loss ratio legislation requiring dental insurance carriers to submit loss ratio reporting:
State | Report Due |
|---|---|
AZ | July 1, 2024 |
CO | July 31, 2024 |
LA | March 1, 2025 |
VA | April 30, 2025 |
Also, several states have proposed dental loss ratio legislation pending, including: Illinois, Missouri, Nebraska, New York, Oklahoma, Pennsylvania, Rhode Island, Washington, & West Virginia.
For more details on dental loss ratio legislation in these states, check out this week’s Insurance Regulatory Insights newsletter.
Reach out to us to learn more about our compliance services.
If you’re ready, here are some ways we can help you:
Newsletter Sponsorship opportunities: Promote your product or services to leaders in the Medicare space. Let’s discuss. (link)
Market Research: Reports that help you wrap your arms around the Senior focused insurance markets. (link)
Consulting: We can help you develop new insurance products for the Medicare market, appraise your books of business, and keep you compliant. Let’s discuss. (link)