How do Medicare Advantage plans compete in a crowded market?

Sep 25, 2023

Nate Jacoby

Director, PwC US


Derek Skoog, FSA, MAAA

Principal, PwC US


Peter Davidson

Managing Director, PwC US


Medicare Advantage plans have emerged as a significant growth driver for the majority of health insurers, reshaping the landscape of healthcare coverage. The appeal of Medicare Advantage stems from its all-inclusive nature, providing beneficiaries with enhanced benefits beyond what original Medicare offers. For health insurers, Medicare Advantage plans represent an opportunity to tap into a rapidly expanding market segment. As the baby boomer generation continues to age, a growing number of individuals become eligible for Medicare, creating a surge in demand for comprehensive yet cost-effective coverage options. Insurers that strategically invest in and tailor their Medicare Advantage offerings to cater to diverse healthcare needs are experiencing substantial growth in both membership and revenue. 

Navigating a densely populated marketplace, it may be difficult for health plans to stand out and confusing for consumers to compare and choose a plan. In 2019, the Centers for Medicare and Medicaid Services (CMS) abolished the “meaningful difference” requirement that required plans to offer substantially different coverage levels across plan offerings in each market. This meant payers were empowered to create unique plans and develop more offerings, creating not only a more competitive landscape, but a landscape with many more plan options available per beneficiary. 

As a result, there has been a >100% increase in the number of Medicare Advantage plans offered from 2018 to 2023, with the average beneficiary currently having access to approximately 43 plan offerings. More than 90% of beneficiaries and more than 70% of counties in the US have access to more than 20 plans. Similarly, there has been an increase in the number of carriers offering plans, with on average one more carrier per county in 2023 than there were in 2018, representing a 30% increase. This combination has created an overwhelming number of options for beneficiaries. Plans that are not competing in the top tier of plans offered, in terms of enrollment, may find it difficult to attract meaningful membership growth long term, which is a pattern that continues to get more and more difficult. This is reflected in the data showing that the top 30% of plans attracted 75% of the enrollment in 2015, while in 2023 the top 20% of plans attract 75% of the population, leaving the remaining 80% of plans competing for 25% of the population. 

Much of this competition has been seen in the $0 premium products. In 2018 there were, on average, 9 available $0 premium plan options to the average beneficiary, with only one of those being a Local Preferred Provider Organization (LPPO). Looking at the current landscape, that number has rapidly expanded to about 28 $0 premium plan options available to the average beneficiary with 11 of those being LPPO options. This represents an over 300% increase in $0 premium options over that time period, and a similar number of new options across HMO (11 new options on average) and LPPO (10 new options on average) products. 

PwC can help plans understand shifts in their specific markets and how they can better differentiate their brand to attract and retain members. For additional details, view our analysis and contact us to discuss further. 

Audrey Cash contributed to this article.


Prescription drug coverage, General Information,, Prescription Drug Coverage - General Information | CMS

Monthly Enrollment by Contract/Plan/State/County,, Monthly Enrollment by Contract/Plan/State/County | CMS

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