Higher utilization contributed to Medicare Advantage’s $5.7 billion underwriting loss in 2024, a marked reversal from serving as a source of earnings in the last five years, said an AM Best news release covering a Sept. 23 report.
“Changes to the risk-adjustment payment model by CMS, as well as lower star ratings across the industry, also have contributed to recent underwriting losses,” Industry Research and Analytics Associate Director Jason Hopper said.
From 2019 to 2022, MA made up 40% of underwriting gains and dropped to 20% in 2023. Just under three-quarters of companies with an MA concentration documented a loss last year.
Utilization, higher medical costs, medical inflation outpacing the consumer price index and expensive treatments will continue to add pressure to profitability, Director Bridget Maehr added.
