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Leavitt Partners Releases “Medicare Advantage Premiums Higher in Markets with Concentrated Health Plans” White Paper

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November 15th, 2017

Salt Lake City, November 15, 2017 – With Medicare Advantage open enrollment period already underway, it is important to examine the Medicare Advantage premiums paid by beneficiaries. Today, Leavitt Partners released, “Medicare Advantage Premiums Higher in Markets with Concentrated Health Plans,” a white paper that examines the relationship between the concentration (a measure of market competition) of Medicare Advantage plans and the out-of-pocket costs to beneficiaries, as well as the association between health system concentration and Medicare Advantage premiums.

The authors conducted a fixed-effects, multivariate regression to estimate the impact of health insurer and hospital system concentration on plan premiums. Key findings include:

  1. Increased Medicare Advantage market concentration (decreased competition) in a county is associated with higher Medicare Advantage premiums;
  2. The highest premiums were in markets that lacked competition among Medicare Advantage payers and hospital markets, suggesting the interaction between Medicare Advantage insurer concentration and hospital system concentration matters;
  3. If all beneficiaries were in markets at least as competitive as the average market today, they would pay nearly $200 million less in annual premiums.

The findings suggest that increasing competition among Medicare Advantage plans can help reduce monthly costs for beneficiaries and lower the amount Medicare pays to Medicare Advantage. Policies that incent competition, monitor current levels of competition, and deter decreases in competition may be beneficial to maintain current beneficiary premiums and avoid premiums increases associated with increased concentration.

The white paper can be viewed here.

About Leavitt Partners:

Leavitt Partners is a health care intelligence business. The firm helps clients successfully navigate the evolving role of value in health care by informing, advising, and convening industry leaders on value market analytics, alternative payment models, federal strategies, insurance market insights, and alliances. Through its family of businesses, the firm provides investment support, data and analytics, member-based alliances, and direct services to clients to support decision-making strategies in the value economy. For more information please visit www.LeavittPartners.com.

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