ConnectiCare Inc. narrowly edged out UnitedHealthcare this month to become the largest insurer of Medicare Advantage customers in Connecticut.
“We’ve been chasing them,” ConnectiCare President Michael Wise said. “We’ve been growing and closing in on them each year, but we finally passed them this year.”
Farmington-based ConnectiCare made an announcement Thursday after the Medicare Advantage enrollment numbers were released March 1 by the U.S. Centers for Medicare & Medicaid Services.
Medicare Advantage is an alternative to traditional Medicare. The former is provided by insurers and the latter is directly from the federal government.
ConnectiCare increased its share of the state’s Medicare Advantage market from 31.3 percent in October to 35.8 percent in March, an increase from 45,156 to 52,765 customers.
“Seniors are really looking for value,” Wise said. “They want the best hospitals. They want the best physicians. They want benefits that eliminate surprises.”
UnitedHealthcare’s market share decreased from 42.5 percent in October to 35.7 percent in March, a drop from 61,304 to 52,663 customers. UnitedHealthcare announced changes last fall to reduce its physician network by thousands of doctors for Medicare Advantage patients. Additionally, a failed negotiation with Yale-New Haven Health System left Yale-New Haven Hospital and its Saint Raphael campus out of network starting April 1 for UnitedHealthcare’s Medicare Advantage patients.
Aetna is the third biggest insurer in the state’s Medicare Advantage market, increasing its share from 15.6 percent in October to 19.1 percent in March, which is a change from 22,489 to 28,218 customers.
WellCare Health Plans Inc. and Anthem Blue Cross and Blue Shield in Connecticut each have thousands of Medicare Advantage customers in the state, too.
This month in Connecticut, 614,302 people are eligible for Medicare, of which 147,357 are in Medicare Advantage plans. That’s up from 610,454 who were eligible in October 2013, the month enrollment began for 2014 coverage. As of October, 144,194 Connecticut residents were in Medicare Advantage plans.
Medicare Advantage is an important market segment to ConnectiCare, accounting for about one-third of the company’s revenues and about 20 percent of its membership.
The Medicare Advantage business has been lucrative for insurers, but the Affordable Care Act, also called Obamacare, squeezes profits with $156 million in funding cuts over a decade to bring the cost of the program closer to traditional fee-for-service Medicare. Despite the pending cuts, it is still a growing market as Baby Boomers reach the Medicare eligibility age of 65.
“The funding reductions, they are a problem,” Wise said. “If they continue on the course that they’re on, ultimately, the Medicare Advantage program won’t be sustainable.”
The federal government has requirements on the percentage of revenue from Medicare Advantage payments that insurers must spend on medical costs for patients. In effect, that puts a cap on profits, Wise said.
“When the federal government reduces reimbursement for these programs, we don’t have a choice but to find ways to pass this through to the consumer,” Wise said.