Medicare Advantage Gets Low Marks for Consumer Choice

Since 2010, more seniors have opted for Medicare Advantage (MA), the private-plan alternative to traditional Medicare. As of 2025, beneficiaries have access to an average of 34 MA plans with prescription drug coverage—double the number available in 2018—and can choose from plans with prescriptions offered by eight different insurers.

The underlying policy goal has been to promote insurer competition, encouraging better benefits and lower costs. But a recent county-by-county investigation using the Herfindahl-Hirschman Index (HHI), a standard competition metric, reveals that MA markets are overwhelmingly highly or very highly concentrated, suggesting little consumer choice.

Market Concentration Overview (2024):

• 79% of counties were classified as highly concentrated (HHI between 1,800–5,000).
• 18% fell into the very highly concentrated category (HHI ≥ 5,000).
• Under 1% were moderately concentrated. None were unconcentrated.
• 93% of MA enrollees live in top-tier concentrated markets.

Rural vs. Urban Disparities:

• 39% of the most rural counties reached “very highly concentrated” status, compared to 15% of rural-urban adjacent counties and just 6% of urban ones—underscoring weaker competition outside metropolitan areas.

Dominance of Major Insurers:

• In two-thirds of counties—representing 59% of MA enrollment—UnitedHealthcare (41%) or Humana (25%) were the top enrollee carriers. UnitedHealthcare led in 41% of highly concentrated and 50% of very highly concentrated markets

• In 44% of counties, one insurer held at least 50% of MA enrollment. UnitedHealthcare dominated in 22% of counties, Humana in 10%.
• While concentration levels have barely shifted, 94% of counties were highly or very highly concentrated in 2010 vs. 97% in 2024.

Why It Matters:

High concentration tends to dull insurers’ drive to offer better benefits or cut premiums, since their market dominance reduces real competition. Despite this, regulators have largely sidestepped MA market structure—except for a notable intervention in 2017, when the DOJ blocked the proposed merger between Aetna and Humana due to concerns about further boosting concentration. Policymakers’ attention has since shifted largely to provider consolidation (e.g., hospitals).

Key Takeaways

• MA enrollment and plan choices have doubled since 2018, all while market competition has remained weak.
• Nearly all beneficiaries reside in markets with minimal insurer competition.
• Market dominance is most pronounced in rural areas, where large segments of counties are monopolized by a few insurers.
• UnitedHealthcare and Humana are the primary market leaders, often controlling over half of local enrollment.
• Regulatory action targeting concentration has been limited and much less frequent than efforts to curb hospital mergers.

Bottom line:

While Medicare Advantage has expanded access and options, the expected competition gains haven’t materialized. Most markets remain dominated by a handful of insurers, especially in rural America, raising concerns about cost control and benefit quality.

Source:

Most Medicare Advantage Markets are Dominated by One or Two Insurers, available from: https://www.kff.org/medicare/issue-brief/most-medicare-advantage-markets-are-dominated-by-one-or-two-insurers/?  

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