Health Plans

5 key drivers of 2023 Medicare Advantage AEP growth

March 29, 2023 | Article | 7-minute read

5 key drivers of 2023 Medicare Advantage AEP growth

Every Medicare Advantage annual enrollment period (AEP) provides valuable insights health plans can use to prepare for the coming years. We analyzed the results from the 2023 AEP to uncover those valuable insights. Overall, the market grew 5.7% with AEP enrollments. Blues and insurtech companies performed better with 8% and 10% growth, respectively, while national plans performed at par with the market, with approximately 5% growth, and payviders fell below the market average with 4% growth. Though insurtech companies grew above market average, they saw the greatest decline in AEP growth (10% in 2023 versus 17% in 2022). 

FIGURE 1: Medicare Advantage enrollment growth across categories and parent organizations

Although the overall categories show these trends, there is quite a bit of variance when analyzing individual health plans. Looking at the top and bottom performers in each category, five key drivers seem to play a role in how a given health plan performed.


Out-of-pocket cost: We observed that average out-of-pocket cost, including the maximum out-of-pocket cost, deductible and premium, was lower for health maintenance organization plans that performed well versus plans that didn’t do well. The proportion of members in zero-dollar premium plans also increased at a higher rate for top performers versus bottom performers. Humana and UnitedHealthcare saw a significant increase in zero-dollar premium plans, adding 102 and 55 new zero-dollar premium plans, respectively.


Star Ratings: The impact of Star Ratings seems to be mixed. For payviders and national health plans, the plans with a higher proportion of 4+ stars did well. The same trend was not seen for regional plans, Blues plans and insurtech companies. CVS Health and Centene Corp. both saw reduced Star Ratings for their plans, and that may have contributed to an overall decline in enrollments, despite an increase in the total number of plans they offered. On the other hand, Humana did well on its Star Ratings, which could have contributed to impressive performance during the AEP.


Plan portfolio: We observed that the share of preferred provider organization (PPO) enrollments was higher for top performers compared to bottom performers. The share of PPO plan enrollees continued to increase, consistent with the trend we have seen in the last few years. Two of the top-performing national plans, Humana and UnitedHealth Group, added 74 and 75 new PPO plans, respectively. One of the top-performing Blues plans, Health Care Service Corp., added 19 new PPO plans.


Service-area expansion: Expanding plans to new counties and launching new plans in existing counties continued to play a key role in enrollment growth for all plan categories. One of the top Blues plan performers, Health Care Service Corp., considerably increased its operations from 2021 to 2023. Cigna’s increase in enrollments also was mainly due to its expansion into new counties and introduction of new plans in existing geographies. Expansion also was a key reason for growth for Devoted Health and Molina Healthcare.


Supplemental benefits: Top performers among Blues plans and payviders offered richer supplemental benefits, suggesting that coverage also may have played a role for certain plan segments. Stay tuned for the next article in this series to see which supplemental benefits moved the needle in the 2023 AEP.

FIGURE 2: Key dimensions differentiate top from bottom performers during the 2023 AEP

As plans prepare for future AEPs, we see three notable implications:

Plan portfolio design becomes as important as individual plan design

As local markets become more heterogeneous with PPO plans gaining traction, enrollments increasing in zero-dollar premium plans and dual-eligible special needs plans, health plans need to carefully craft their portfolio of plans for a given market. This will require they understand different customer segments and their preferences at the local market level—and then design a portfolio that maximizes the potential for new member acquisition.

Expansion remains a key driver for growth

With overall Medicare Advantage awareness and penetration increasing, expanding to new markets is critical. Health plans hoping to outpace competitors and the overall market will require a leadership mandate and advanced analytics capabilities to identify the next-best county or geography to expand. 

Competition is mainly between national and regional plans, including the Blues

Insurtech companies are losing steam, with most still not profitable and slowing down their market expansion drives. They don’t appear to be a threat to traditional Medicare Advantage plans as predicted a few years ago. That said, the key competition will be between national and regional plans, including the Blues. Health plans will have to define their value proposition accordingly, with regional plans focusing on local networks and more personalized member and provider experiences versus richer benefits and broader networks from national plans. 

The 2023 AEP sets the stage for what’s next

Overall, the 2023 AEP proved to be significant. It was the first post-pandemic AEP, and observations promise to provide a good sense of how things will play out in the next few years. Plans should complement overall market insights with a deeper look at the results in their respective markets to craft their near-term growth strategy.

Add insights to your inbox

We’ll send you content you’ll want to read – and put to use.

About the author(s)