Medicare beneficiaries throughout the state are weighing their options during Medicare Advantage open enrollment season, but residents in Riverside County may have more choices to consider than others elsewhere in the state.
“In Riverside County and surrounding counties there are far more insurance companies competing to provide plans,” said Laurel Beck, Public Policy Institute of California research fellow.
In August, a report on Medicare Advantage plans by the Commonwealth Fund found that Riverside County was the only U.S. county with a competitive Medicare Advantage market.
“Even though Riverside County was pointed out as the only county that fit into the non-concentrated category, it actually barely made it,” said Stuart Guterman, one of the study’s authors and senior scholar in residence at Academy Health. “We also found that almost every county in the country is in the highly concentrated range.”
In the analysis, which looked at 100 counties with the largest number of Medicare beneficiaries, Riverside County scored just below the cut off for a non-concentrated market. More than 80% of the counties studied were categorized as highly concentrated, meaning they have very little competition.
Experts believe the large senior population in Riverside County, just as in many Southern California counties, may be the factor fueling increased competition. Riverside County is home to 2.3 million people, and according to the study, it has 103,836 Medicare beneficiaries.
Beck maintains that Riverside County isn’t that much different from neighboring counties in the area, such as Los Angeles, Orange and San Bernardino. These four counties, all in the Los Angeles area, fall within the top seven counties with the most Medicare beneficiaries in the nation. Los Angeles County is No. 1 with more than 313,000 beneficiaries.
Overall, the greater L.A. area is very competitive relative to the rest of the country, and Riverside is part of that, Beck said.
Elaine Wong Eakin, California Health Advocates executive director, noted significant differences between Northern and Southern California in terms of availability of Medicare Advantage plans. Northern California counties tend to have fewer such plans, and there are 10 counties, some extremely rural and remote, that have no Medicare Advantage plans, she said.
“It’s about math. It’s about population,” Wong Eakin said. “L.A., Riverside, San Bernardino, Orange and San Diego — all of these have more Medicare Advantage options.”
A large, concentrated population in the Los Angeles area is likely influencing the market, Beck said.
She added that across the nation, this theory tends to hold true, because the counties with the most-competitive markets are those in major metropolitan areas, such as New York City.
Riverside County has 34 Medicare Advantage plans, and its neighbor to the north, San Bernardino County, has 37 plans, said Gilbert Sauceda, a program manager for the Health Insurance Counseling and Advocacy Program (HICAP). In fact, these are not unusual numbers for Southern California, where a number of counties have 30 or more Medicare Advantage plans, he said.
But he thinks a number of factors could be influencing the Medicare Advantage market in Riverside County.
“I think there’s more to it than saying population has something to do with there being more competition,” Sauceda said.
He said one of the drivers in Riverside County is geography because the population is spread out across vast distances, and the county has a number of urban areas. Major metro areas in the county include the county seat of Riverside as well as Palm Springs and Temecula.
Due to the county’s geography, transportation tends to be an important Medicare Advantage supplemental benefit for enrollees in the county, he said.
Laurence Baker, health research and policy professor at Stanford University School of Medicine, also noted that geographic variations can affect competition. It might look like there are a lot of plans, but in fact, there may only be a few plans for each given area, he said. And if a couple of small plans decide to set up shop that could increase the competition quite a bit.
Keeping Prices Down
According to the Commonwealth Fund study, six major insurers dominated Medicare Advantage markets across the nation in terms of beneficiaries enrolled. UnitedHealth was the most dominant firm, while Blue Cross affiliates, including WellPoint, had the largest Medicare Advantage enrollment in 13 counties.
This lack of competition is a big concern because competition keeps prices low and quality high, and for Medicare Advantage enrollees, this would translate to services covered at a lower out-of-pocket cost, Beck said.
Other benefits of competition include more supplemental benefits, lower co-pays and lower premiums, Wong Eakin said. For example, there are many Medicare Advantage plans in Southern California that have zero premiums, she said.
“The lack of competition in the Medicare Advantage market is probably related to the overall structure of the insurance industry,” Baker said. “As a general principle, the insurance system in many places is not that competitive.”
Because Medicare serves a relatively small population (seniors 65 and older), there is not as much incentive for insurance companies to jump into markets where another company may already have a foothold, he said.
Wong Eakin said the premise that competitive Medicare Advantage markets will decrease costs and improve quality of services still needs to be tested. She said the theory relies on the assumption that beneficiaries will hop around if plans change, such as if premiums go up or providers drop out of a network.
“We find people don’t do that,” she said. “Part of it is inertia. You don’t want to do the homework to see what else is out there. The theory breaks down a little.”