What the future holds for Medicare beneficiaries
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What is Medicare Advantage and why is it growing rapidly?
Welcome to the Medicare Podcast Series. Medicare was a program started in 1965 to provide health insurance coverage to U.S. seniors aged 65 years and over. Medicare Advantage, also known as MA or Part C, is an alternative to traditional Medicare. It allows beneficiaries to get Medicare benefits offered by approved private insurance companies. It is the fastest growing Medicare segment nationally with over 8% KGAR, 27 million enrollees representing 44% of eligible Medicare beneficiaries. In fact, some of our research shows that MA plans have materially improved on cost and efficiency over the last 10 years compared to traditional Medicare and even commercial lines of business. They outperform commercial and Medicaid on a number of metrics, including quality outcomes and access to care.
MA is profitable, it is stable, and has long had bipartisan support. In today's episode, we will listen to how Medicare market leaders and innovators are transforming healthcare to meet the evolving needs of seniors.
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This is McKinsey on Healthcare. I'm Monisha Machado-Pereira, a senior partner at McKinsey and leader of the firm's Medicare practice. Today on the podcast, I'm excited to be joined by two leaders in this space. From Humana, a market-leading Medicare payer that serves over 4.5 million Medicare Advantage members, is retail segment president Alan Wheatley. And joining us from Alignment Healthcare, a fast-growing Medicare Advantage innovator that recently launched an IPO, is founder and CEO John Cahill. Welcome to you both.
Thank you. Happy to be here. Thank you.
Typically, people start with your company and products, but I'd like to start with you as individuals and understand what your journey has been to get you to this point. Alan, let's start with you.
Okay. Happy to start. I have been with Humana on September 3rd of this year will be my 30-year anniversary. When I started with Humana, we were the nation's largest hospital system. We spun off our hospitals in 1992, about a year and a half after I started, and I stayed with the insurance company. I'm a finance accounting guy by training, but I've done a lot of things internally at Humana. I ran a consulting group for quite a while and moved into the Medicare business in November of 2004. Shortly after the Medicare Modernization Act was passed, December 03, that changed the game for Medicare beneficiaries, most importantly, but certainly for Medicare Advantage organizations because it appropriately funded the program and created the Part D program because prior to that point, Medicare members had no drug benefit of any material value anyway.
We grew from 350,000 members back in 2004 to the 4.5 million that you mentioned. We were not a large component of the business, and it wasn't a large part of who we were for a while. So in some ways, I got the opportunity to be a small company inside a large company, and that afforded us the opportunity to move quick and to grow.
That's great, Alan. John?
Yeah, I've started serving seniors about 25 years ago. I started with a company called FHP, which was one of the first Medicare contractors back in the 80s. I think I started there in 1994, I think it was. And then in 1995, FHP and Pacificare and Secure Horizons merged. And so I joined Pacificare and worked with one of my mentors, Alan Hoops, And there I learned about provider partnerships, learned about scaling Medicare Advantage. And prior to alignment, I was with a company called CareMore. And there I learned about chronic disease management and bending the cost curve and how to identify the 20% of the chronic frail population that account for 80% of the spend. And you put all that together and all the lessons learned
is really where and how I got into starting Alignment. But I think that was amplified from just some personal experiences that I had with my mom. And I think there's an opportunity for us to make Medicare Advantage even better and to have higher degrees of consumer advocacy. If I can help the entire industry and have people and care delivery and benefits take care of all seniors like I would want my mom to be taken care of.
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