Competition is central to the design of Medicare Advantage (MA), with the potential to encourage plans to improve quality, lower enrollees’ out-of-pocket costs, and offer additional benefits. Yet in many parts of the country, MA enrollment is highly concentrated among just one or two insurers.
Birmingham, Alabama, stands out. Unlike many local MA markets, Birmingham has sustained a relatively high level of competition: five or more Medicare Advantage organizations have competed in the market over the past decade, and today eight MA organizations compete for most enrollees.
In a new case study, Medicare Advantage Competition at the Local Level: A Case Study of Birmingham, Alabama, Georgetown University’s Medicare Policy Initiative examines why Birmingham’s MA market is more competitive, how plans compete for enrollees, and what that competition means for beneficiaries and the Medicare program.
The report identifies several factors that have helped foster competition in Birmingham, including:
- A large Medicare population with high MA enrollment
- Growth in Special Needs Plans
- Employer use of MA for retiree coverage
- Medicare payment policies that make the market attractive to plans
- Alabama’s approach to Medicaid, which has facilitated entry by D-SNPs
The Birmingham experience also illustrates an important policy tension: more competition can produce meaningful benefits for enrollees, but not every form of competition necessarily produces greater value for beneficiaries or taxpayers.
The case study highlights questions for policymakers about MA payment, supplemental benefits, quality incentives, and how to promote the beneficial effects of competition while limiting unintended consequences.