Competition and health plan quality in the Medicare Advantage market.

OBJECTIVE

To examine the relationship between insurer market structure, health plan quality, and health insurance premiums in the Medicare Advantage (MA) program.

DATA SOURCES/STUDY SETTING: Administrative data files from the Centers for Medicare and Medicaid Services, along with other secondary data sources.

STUDY DESIGN

Trends in MA market concentration from 2008 to 2017 are presented, alongside logistic and linear regression models examining MA plan quality and premiums as a function of insurer market structure for 2011.

DATA COLLECTION/EXTRACTION METHODS: Data are publicly available.

PRINCIPAL FINDINGS

MA plans that tend to operate in more concentrated MA markets have a higher predicted probability of receiving a high-quality health plan rating. Operating in more concentrated MA markets was also found to be associated with higher premiums. Among plans that tend to operate in very concentrated MA markets, high-quality MA plans were associated with premiums as much as two times higher than premiums associated with lower-quality plans.

CONCLUSIONS

Any policies directed at enhancing insurer competition should consider implications for health plan quality, which may be very different than the implications for enrollee premiums.