Reduced Medicare Advantage Insurer Concentration Associated With Small Improvements In Market Outcomes, 2013-23

Medicare Advantage (MA) enrollment has grown rapidly over recent years, and enrollees may now choose from among a large number of MA plans. However, the market remains highly concentrated, with a few very large insurers. Using MA administrative data, we analyzed trends in insurer concentration during the period 2013-23 and its relation to MA payments and plan characteristics. We documented a significant shift toward less concentration, but concentration remained high. The average number of insurers per county increased, and the Herfindahl-Hirschman Index measure of market concentration declined. Reduced concentration was associated with lower Medicare payments and individual premiums, higher plan rebates, and less enrollee cost sharing. The estimated effects, however, were quantitatively small. Our findings suggest that further reductions in MA insurer concentration may yield only modest benefits for Medicare beneficiaries and the program unless concentration falls well below current levels.