Monitoring the evolving Medicare market: Essential insights for plan sponsors

Trevis Parson:

My name is Trevis Parson and I'm the Chief Actuary for WTW Via Benefits business, and I'm pleased to be joined today by two of my colleagues, Barry Carlton, who happens to be a Medicare enrollee himself and Eric Stanger, who is not a Medicare enrollee but's really looking forward to it someday, both retiree healthcare consultants and together we'll walk through the 2027 CMS final notice and what it might mean for Medicare insurance markets, and more importantly, what it may mean for retiree medical plan sponsors. You're gonna notice that, and I'm sure you anticipate this, that some of the today's material is pretty technical. We're gonna do our best to keep the discussion practical and focused on what matters most for you and plan sponsors broadly and the participants within your plans. So at a higher level, the 2027 final notice really came in better than many expected CMS finalized an overall Medicare Advantage payment adjustment of about 5%, which is about twice the level reflected in the advance notice.

Trevis Parson:

And that helped ease some of the immediate concern around market disruption, which we've all seen over the last few years as Medicare advantage carriers balance economic challenges with CMS funding in their product offerings market to market. But in spite of the final notice coming in ahead of the advance notice, broader pressures remain. And these broader pressures facing retiree medical plan sponsors remain very real and are largely economic in nature. Costs are up and for most the appetite for risk is down. Many sponsors have seen very high recent rate renewals, and in some cases, to mitigate those increases have had to change the way they deliver the plan. Often separating the medical benefit from the pharmacy benefit participants are facing pressures as well. Many retirees on fixed income often face a leveraged form of economic risk. As premiums contributions out of pocket costs rise, they consume a greater portion of their fixed household budget.

Trevis Parson:

And at the same time, of course, their health insurance needs are often increasing, which can lead to some difficult choices. So as you all listen today, I'm hopeful that you'll think about a couple of critical questions. First of all, is your retiree medical plan meeting your objectives in this dynamic market? And if you're a group plan sponsor, maybe a good question for you is, is your plan offering material incremental value above and beyond what retirees might be able to buy on their own? And if you're in the individual market today, you might want to ask yourself, is the level of financial support that you're providing participants sufficient given the recent changes in insurance costs in the market? I'll turn it over to Barry To get us started,

Barry Carleton:

I'm gonna provide an overview of some of the technical content in the notice that affects the Medicare market so that you can better understand how these changes may affect the group plans that many of you sponsor. Let's start by taking a look back a year at how the final notice changed compared to the advanced notice for 2026, we can see that the effective growth rate moved up by about three points. This generally reflected an increase in expected medical inflation with more months of Medicare claims. This drove the expected average change up from about two point a quarter percent to a touch over 5%. When we add another couple of points for the risk scoring trend, the final increase worked out to be about 7% for 2026. There is still some choppiness in the market. Carriers made some changes to their plans, some withdrawals, shifting of benefits, reduction in supplemental plans and so forth.

Barry Carleton:

But overall, 2026 has fared well, and we'll share some statistics on that. So in general, a strong and stable Medicare advantage market, we expect ultimately the same in 2027. So let's take a little closer look at a couple of the key elements that we'd like to focus on. So first, the effective growth rate. This is based on an assessment of Medicare fee for service claims under Medicare parts A and B. It moved up just a little bit from the advanced notice to the final notice, and this suggests a prevailing level of medical inflation of around 5%, which is a mix of provider payment levels administered by Medicare and utilization levels.

Barry Carleton:

The next item risk model revision. So the final notice delayed certain changes to the risk scoring model, thus jacking up the final payment by more than two points compared to the advanced notice. CMS did this essentially to avoid market disruption in an election year to give the carriers in the marketplace more time to absorb what could be more stringent risk model conditions in 2028 and later. So it defers this change. It's explicitly for political reasons, it's probably gonna continue to bite a little harder in 2028 and beyond. The final notice does retain a change proposed in the advance notice to exclude from risk coding practices any diagnoses that only appear in what are called chart review records and that are not substantiated by other medical encounter data. The intent here is to reduce or eliminate potentially abusive practices by some MA insurers that could identify health risks that are not substantiated by actual medical services.

Barry Carleton:

So they moved off of this, it meant that instead of a three and a third percentage point cut was only a bit over a point and therefore shifted another two points into the final payments. Lastly, we have risk scoring trend, and this is an in interesting item because it's not really in the headlines. CMS itself only treats it in the footnotes, but they expect that plans will see their risk codes increase in intensity each year with population aging and that they're projecting for 2027 that that risk scoring trend bump will be about two and a half percentage points. So for MA plans, looking at their revenue, if they're expecting that level of risk score trend, then they're gonna build that into their revenue model. And Trev, you mentioned earlier that the market responded pretty favorably to all of this. The more knowledgeable members of the market are understanding that the risk scoring trend needs to be added into the underlying increase.

Barry Carleton:

So the end result, when we take about two and a half points from the headline increase and add in another couple two and a half points for the risk scoring trend we left with about a 5% increase. The central question remaining then for the carriers is, will the 2027 CMS funding align appropriately with the underlying level of medical claim inflation that they're seeing Insurers have to start building their rate proposals in another couple of months, they're working on it now. Certainly that means they only have a couple of months of actual 2025 experience to inform how they'll set their rates for 2027. So a good deal of speculation in a rapidly changing environment. The carriers of course need to satisfy their policy holders, their members, but also their stockholders in many cases, and they're struggling with, with that balance here and an era of significant continuing uncertainty, we're focusing today mostly on the payment terms for the MA plans. Key elements of the Part D financing won't be known until the release of the national average bid in midsummer this year.

Trevis Parson:

Yeah. Hey Barry. Sure. Just one more thing for you. So the advance notice is coming in about half of this, right? And ensure stock price down final notice comes out 5% insure stock price up. What, what do you make of this? I mean, the market's been pretty volatile over the last couple years and sometimes it moves in different directions than the final notice payment increase, right? So last year we had a pretty nice number and yet the market saw some plan terminations and reshuffling of product menus in different places. What's, what's your read? I know it's super early and we're gonna have to wait to see what the actuaries and the insurance company departments ultimately come out with, but Right. What, what, what do you think in this year, I mean, do you feel like the increases that group sponsors are gonna see are going to be as severe as they've been in certain cases over the last year? Do you feel that the individual product menu and the availability of choice this coming year is going to be as robust as it's been? Or is it gonna be pretty noisy and people are gonna have to take a hard look and think about what they wanna enroll in?

Barry Carleton:

I think as far as the individual market is concerned, there's gonna be slight pressure, increased focus, continuing focus of the insurers on their profit margins, their stock price. From the federal government perspective, you know, this is a technical release, but it has political implications. There's a calibration that's going on. And if you think about programs for seniors, Medicare Advantage and Part D, they consume, oh, I don't know, $700 billion or so of the federal budget. These are giant programs that live in this sort of twilight zone between private sector delivery and public sector taxpayer funding. There's an an election this fall and maybe there's some considerations there about how seniors react. So I think they're balancing a multitude of factors on the MA side. They've been clamping down somewhat on the payment levels for the last few years through risk adjustment changes. And I think that continues with some tension.

Barry Carleton:

The pharmacy side is a bigger wild card because its changes, and we'll speak more about those in a minute. Its changes are still materializing. We have one year in and a couple of months through the new IRA driven changes, but more significant changes are occurring in pharmacy as we speak. So rolling all this up, not having a crystal ball, my sense is that things are gonna look pretty much okay to seniors this fall. I think zero premium plans will still be widely prevalent, but we may see some further trimming of supplemental benefits, maybe some further shift away from PPOs toward HMO plans, maybe some additional tension with healthcare systems and providers over negotiated rates and some changes in network access and so forth. So I wouldn't say totally smooth sailing, but I think it's gonna be a fairly reasonable year for seniors electing coverage next year. Group sponsors, we'll talk a little bit later about integrated group MAPD plans. We have some more questions about the financial feasibility of those plans, and we will address some of that a little bit later, if that's all right.

Trevis Parson:

No, that sounds good. Thank you Barry.

Barry Carleton:

So let's talk about MA enrollment. Total enrollment group plus individual has been rising steadily for decades and now exceeds 35 million people. So this accounts for more than half of the entire Medicare enrollment. Almost all seniors have access to zero premium MA plans, and about three quarters of seniors elect these zero cost plans. And it, it's even better than that. In some cases, plans have what's called a part B premium buydown that uses excess funding to not only offer a zero premium, but to actually reduce the Part B premium that hits a senior's social security check. I think the carrier's gonna look very hard to maintain those zero premium plans and would prefer some benefit trimming and other changes to control costs versus implementing a premium in these plans. I think they're gonna fight hard to maintain zero premium plans. 'cause that's an easy sell in the marketplace.

Trevis Parson:

Yeah, it sure is. And a highly competitive one, right? Sure. So we just got them talking about the dynamics in the market and changing product menus. Mm-hmm. Market to market over the last couple years. Yeah. Every fall these retirees get a chance to re-enroll and get to make another decision without any That's right. Concerns of underwriting or what have you. And so you're looking out there and a zero is pretty darned attractive. If you're not in the zero range, yeah, somebody's probably not gonna look at you as much as they would otherwise.

Barry Carleton:

And there are even some zero premium standalone Part D prescription drug plans. Noted that enrollment includes group plans and that's continuing with about 5.8 million members. About roughly one in six MA members are in employer group plans. This figure, it's risen over time, but it's remained relatively stable in the past couple of years. So there are still a, a large number of employers sponsoring group MA and MAPD plans that are included in these numbers and of course are very interested in the financials underlying them somewhere around a $580 billion federal expense just for the MA plans, not including original Medicare Part D or anything else, big, big program. So shifting to Part D, I'd say in many ways this is the bigger story because it's more visible in many ways to seniors and certainly to employers. So the big news has been the continuing rollout of major fundamental improvements in Part D coverage under the inflation reduction Act of 2022.

Barry Carleton:

These changes have phased in many took effect in 2025, including the most significant benefit enhancements. So let's talk about the key elements of that here. And first, under the out-of-pocket maximum, I'll use this term interchangeable with the federal term troop, true out-of-pocket limit. So prior to 2024, there was no cap on a member's out-of-pocket costs because members had to continue paying the 5% catastrophic co-insurance after reaching the true out-of-pocket limit. One of the first changes from the IRA was to eliminate that 5% cost sharing in 2024. And what this meant was that member out-of-pocket cost for the highest cost members was gonna be capped at about $3,500, depending on their mix of brand and generic drug usage. 2025 comes along and the IRA implements a new $2,000 out-of-pocket maximum. And this sounds great, but it's even better than it sounds for members when you realize that, um, part of the rules under the IRA is that benefits in excess of standard part D accumulate toward the $2,000 limit, and that reduces what members pay out of their own pocket to, uh, below 2000 in many cases well below.

Barry Carleton:

So here's a simple example. Assume a brand name drug with a cost of $400 and a plan with a $50 copay under standard Part D, there'd be 25% co-insurance for the member for a hundred dollars copay. Well, guess what counts toward the out-of-pocket limit? It's not the 50 that they paid, it's the a hundred that they would've paid had they been enrolled in the standard Part D plan. So they get these excess credits and it reduces their out-of-pocket costs to below 2000. A very interesting study from Milliman was released last October looking at individuals in the Part D market who had reached the true out-of-pocket maximum during 2025. This is in the individual market, not in group plans, which tend to be richer. They found that for members reaching the true out-of-pocket limit, what they had spent out of their own pocket was only about $1,200 with the balance of $800 being made by the plan's excess benefits. We know. And

Trevis Parson:

So, Barry, hold on a second. So yes, you're not saying that the out of pocket was less than 2000, right? I mean, this isn't some average across all users. You're saying that even for the higher users, it's not $2,000. It's actually far less than that because of the way the plan adjudicates relative to standard Part D.

Barry Carleton:

If someone's enrolled in standard, truly standard Part D, which is hard to find, the maximum liability they could face is $2,000. But to the extent that their plan has for any level of drug coverage benefits in excess of standard Part D, they get these extra credits that reduce their out-of-pocket cost.

Trevis Parson:

So the cap really isn't 2000, oftentimes it's far, far less than that, much, much less than

Barry Carleton:

That. Absolutely. Much, much less individual market. Milliman is pegging that at about $1,200. We know that most group Part D plans, whether through MAPD or standalone EGWP are even richer. And therefore the amount paid out of pocket by the member when the $2,000 cap is reached could be well below a thousand dollars. And we would advise employer sponsoring plans to request data from their insurers or, or their PBMs to ascertain what members are actually spending in 2025 when the federal $2,000 limit is reached so they can understand how the excess benefits built into their plan design are reducing member out-of-pocket costs. Great. If you're a member, the flip side here for employers is whether this is forcing you to enhance your benefits beyond the point you would've ever considered appropriate for your Medicare population. We think that's an important consideration for employers. The individual market has gotten substantially richer, but these changes are forcing cost upon employer plans and forcing employers to adopt richer benefits than they may have intended. And that, you know, may not be appropriate for them.

Trevis Parson:

Well, not only that, Barry, right, we are far, far long removed from the days of the donut hole. Right. I mean, the actuarial value back then when Part D was originally launched,

Barry Carleton:

50% or so,

Trevis Parson:

Just over half, right? Yeah. It's gotta be pushing nine upper eighties at this point. Mm-hmm

Barry Carleton:

Mid to to upper eighties at least.

Trevis Parson:

Easily. Easily, yes. And I can't help but wonder if it isn't richer than frankly, a lot of those actively at work enjoy in terms of the pharmacy

Barry Carleton:

Benefit. It certainly, it certainly is. Yes.

Trevis Parson:

Absolutely. Very rich. Interesting.

Barry Carleton:

Yeah. So federal price negotiations, this is another politically interesting question because pharmacy prices are a popular bipartisan topic of complaint. So the Democrats enacted federal price negotiations under the IRA, the Trump administration comes in and says something like this. We share the goal, but we think we can do a better job of negotiating with the pharma. So let us take the reins. To some degree, this is taking rebates off the top, but to some degree, these are real price concessions, price controls by the federal government. The first round of drugs affected by negotiated prices just took effect at the start of this year. Those drugs accounted for about 20% of part D spending additional rounds take effect cumulatively each year. So that ultimately a rising share of brand spend under Medicare Part D will be subject to federal price controls. And it's not just the initial price, it's the price change over time that's also governed under these rules. So those are other positives. They benefit members who may pay a portion of the cost of the drugs through co-insurance and deductibles. So the lower prices at the pharmacy mean that members will be sharing some of that benefit. So a, a new era in government regulation of healthcare benefit programs here, taking a, a fairly heavy hand and a very public hand in pharmacy price negotiations. Yeah.

Trevis Parson:

And I guess to the extent that these negotiations are representing a significant portion of pharmacy spend, right? Yes. Even for those that have hit the out-of-pocket, those participants, it's still taking pressure off the system as a whole and offering. Mm-hmm. Ensures the opportunity to continue to offer benefits at perhaps a more elevated level than they otherwise would with these enhancements that reduce the out-of-pocket that you talked about Barry. Um,

Barry Carleton:

Well, and think about

Trevis Parson:

The, this is, this is a meaningful thing, you know, it's not just, it's not just, oh, for a couple bucks here at the pharmacy before you hit your out of pocket, which is pretty low even after that. Mm-hmm. I think it's having more macro effects on the value of the benefit overall.

Barry Carleton:

Yeah. And think about the Part D insurers in the individual market, right? Whether standalone or through MAPD, they have fewer levers to turn in designing their programs. They have federal action that dictates prices and benefit provisions for them. They have federal minimums on things like formularies and so forth. It's becoming more commoditized. Part D plans don't have the benefit differences because they've all gotten so much richer. They've compressed in terms of the, the differences in benefit value.

Trevis Parson:

That's right. Not, not a lot of room to get better after this, I guess, Eric, right? I mean, they've come so far from the donut old days.

Barry Carleton:

Uh, something

Eric Stanger:

Barry, we were talking, talking about earlier today, and that is these negotiated prescription drugs are required to be offered on the for plan formulary of every Part D plan that's available.

Barry Carleton:

Absolutely.

Eric Stanger:

That those, those lower cost drugs will then become available to everybody on every plan.

Barry Carleton:

That's right.

Eric Stanger:

Benefits to, yeah.

Barry Carleton:

And you know, the pharma industry has survived attacks on its business model before they have very smart people involved in the pricing side of their business. And so I think they'll manage to accommodate these changes as well. But it speaks to the growing federal and public support for very visible changes in pharmacy coverage for seniors. So let me close with a couple of comments on premium suppression. A couple of programs fall into this category, and one is that under the IRA, what's called the base beneficiary premium, it's an element of calculating the federal subsidies is capped at an increase of no more than 6% a year. And when pharmacy trend is higher than that, which it has been since this was adopted, it means that dollars are used to increase the federal subsidy payments to the plans, which therefore reduce the premiums charge to members.

Barry Carleton:

We have another program that only applies to standalone prescription drug plans, including group standalone plans, and that's the CMS demonstration program adopted in the final year of the Biden administration, who has extra payments for plans to use to offset otherwise applicable premium increases. It's a three year program. We're in the second year of it. Now, the amount of payment was reduced in 2026 versus 2025. And there's a good chance it will be reduced again for its final year in 2027. It might even move to zero, we'll see more in, in the summer. But the point here is that Congress said, on one hand, we want to improve the benefits for America's seniors on Medicare and their pharmacy coverage. On the other hand, we don't want them to pay for it through higher premiums. And so there's a double whammy there in favor of the the, the individual marketplace through both the benefit enhancements that especially benefit high users and the premium suppression that benefits all enrollees.

Barry Carleton:

So let's look at part D enrollment over the 20 years since Part D was adopted. And we can see that total enrollment is now up to $56 million. But the green bars representing people enrolled in integrated MAPD plans, you can see that those have grown more rapidly. So that's echoing the slope we saw in the earlier slide about the rising MA enrollment. So no real surprise there, but it's interesting on the blue bars, we can see a bit of a bulge back in, uh, 10, 12, 13 years ago, um, where the share of enrollment in the standalone PDPs reached probably its peak level oh seven or eight years ago. And then for a number of years it declined relative to MAPD plans, but then it started moving up again in 2024. And I believe that's due to the IRA driven policies that were aimed at making standalone part D prescription drug plans more attractive.

Barry Carleton:

So the benefit enhancements helped the negotiated prices will help the premium suppression. Some of it was aimed totally at standalone plans. But another dynamic in 2026, and this is called out by CMS and other observers, if you look at the numbers, you can see that the PDP enrollment went up by 2.7 million people in 2026. And a significant share of that was from employers who had moved their integrated a PD plans into standalone decoupled group MA plus group, part D PDPs. And so there was a major shift on the part of employers to decouple their a PD plans to help reduce the cost of the plans. And we'll talk a little bit more about that as well. So let's talk about what this might mean for the individual market on the MAPD side. Certainly some continuing cost pressure, a delicate balance in terms of federal payment policies, questions on underlying medical inflation, how the insurers assess all of this and use that to develop their plan terms.

Barry Carleton:

But the larger backdrop here is more seniors on Medicare every year, an increasing share of them electing Medicare advantage plans and a political awareness that there's risk involved in tampering with programs popular with seniors. So we think popular with a lot of seniors, like tens of millions of them, right. All of whom vote Yes. <laugh>. So some, some continuing tension probably overall, is this gonna end up being a year of modest change and a bit of trimming where that tension will essentially be kept below the surface? Probably that's, that's my view. Medicare supplement, we haven't spoken much about this, but we have about 14 million seniors enrolled in these plans who prefer the flexibility and the richer coverage, no network requirements. We have noted a definite trend toward significant premium increases, sometimes into double digits on the part of these carriers. A lot of that reflects the underlying inflation medical trend that we're seeing across the board in the United States. Some of it may reflect some risk segmentation as more seniors, more healthier. Seniors take Medicare advantage. Maybe the seniors left in the Medicare supplement pool are less healthy on average. And maybe that's driving up some of the plan costs for these plans. But overall, they don't get federal funding. But their rates are a function of the cost of underlying Medicare. They're generally stable. They're popular among seniors who have the financial wherewithal to cover the premiums, which can easily be several hundred dollars a month or more.

Eric Stanger:

As you were saying that, it just occurred to me that I, I don't know that there's a trend yet, but something we're keeping a close eye on. And that is we've seen some states enact more generous accessibility into Medicare supplement plans where

Barry Carleton:

Absolutely they

Eric Stanger:

Have, they haven't been universally guaranteed issue. Right. There've been, uh, Medicare or medical underwriting required to get into Medicare mm-hmm. Supple in most of the country. And we're starting to see that change region by region.

Barry Carleton:

It's definitely a trend. Eric, more states, states can't be less liberal than the federal rules applicable to guaranteed issue, for example. But they can be more generous and many are doing that. They're adopting rules that allow more opportunities for people to move into plans on a guaranteed issue basis without medical underwriting. So that is definitely a trend, and that will probably continue. Right. So it's hard,

Eric Stanger:

It's a good safeguard against situations where Medicare advantage plans change.

Barry Carleton:

Absolutely. So on part D for the individual market, the out-of-pocket maximums and deductibles are indexing upward in 2026. They've done that. They'll do it again in 2027, the out-of-pocket limit will index up. In fact, $2,400 cost trend in the pharmacy world is much harder to gauge. Now, with the increasing federal role in negotiations, CMS policies continue to support standalone plans to ensure that they remain affordable and attractive to seniors. But the bottom line on Part D is simple. The coverage is richer than anyone could have imagined when the Medicare Modernization Act was passed in 2003 and we were dealing with the donut hole and no ultimate out-of-pocket protection. So America's seniors are better off employer sponsoring these plans should question whether group sponsorship is still useful compared to the increasing strength in the individual market.

Trevis Parson:

Yeah, it's hard. It's just so hard to argue with the improvements in this benefit over the last 20 years that you can do better. Right? It's, it's so rich at this point that the amount of room to improve upon it is really very, very limited. And yet the, the volatility associated with compliance cost and other mm-hmm. Issues, there's a real, real effort and cost associated with all that. And so when your return is really restricted, it, it makes you think about it for sure. Mm-hmm.

Barry Carleton:

Yeah. The original intent behind group sponsored plans was to fill gaps in coverage that the individual market could not fill. Right. And through legislation and the market response to that and the aging population, those gaps have been filled.

Trevis Parson:

How about group Barry

Barry Carleton:

I mentioned earlier, a significant shift in enrollment away from these integrated plans. So when we say integrated plans, we mean an MAPD plan through a single vendor insured that combines the medical benefits and the pharmacy benefits under a single policy starting in 2025 CMS adopted policies that essentially result in penalties for these integrated plans. And one was this demonstration project that we mentioned that increased payments only to standalone PDPs, including employer sponsored PDP EGWPs, but not to the integrated plans. Another change is, this gets a little more technical, but CMS in looking at the risk scoring components for pharmacy, decided to start differentiating risk scores by Part D plans that were integrated versus Part D plans that were standalone. And the result here is that they have increased the risk scores for the standalone Part D plans. We mentioned a minute ago that maybe Medicare supplement plans are seeing some adverse selection that's worsening their risk pool, but they're the same folks who are buying standalone Medicare Part D plans and maybe that same experience dynamic is occurring there.

Barry Carleton:

CMS sees this and says, well, we need to make sure we're compensating plans fairly and we're seeing major cost differences between individual KDP enrollees and integrated MAPD enrollees. So we're gonna raise the payments for the standalone plans and cut them for the integrated plans. Now this is a permanent change. CMS continues to review this each year to determine what the appropriate spread is. But the, the net effect here is that the standalone plans are now getting higher risk scores to reflect the higher risk of their enrollees. All of this meant that for many employers decoupling their MAPD plans was the right approach for 2026. We expect more sponsors of MAPD plans to consider doing that for 2027. Now, for employers who already sponsor or newly sponsoring standalone group MA plans decoupled, the main question I would have is whether insurers feel that they're going to earn CMS compensation adequate to their claim trend and what impact that may have on plan rating.

Barry Carleton:

Is it possible some insurers may come back and look to reopen rating agreements and say, Hey, based on changes in federal funding policy, we need to implement a rate or increase a rate for the group MA plan. And for the, those of you sponsoring those plans, I would keep an eye out for carriers looking to reopen contracts if they feel it's necessary to maintain the profit margins that they're looking for on this business. Closing out on standalone Part D, many employers sponsor these standalone EGWPs, most of which are self-insured with often attractive rebate and full pass through arrangements for all federal funding that offsets cost. And that generally results in the lowest net cost for pharmacy coverage. These plans benefit from the changes in the IRA that affect price negotiations. The benefit provisions apply here in group plans as well as individual plans, the federal subsidies and so forth. And because these are PDPs, they benefit from the risk normalization policy that triggers higher payments from CMS to the standalone plans. And they're also benefiting from the CMS demonstration program that is channeled solely to PDPs, including group plans. So for employers who are committed to group plan sponsorship, the optimal structure financially is to decouple plans, continue to manage the group medical plan through the MA arrangement with the federal funding, offsetting the cost, and offering a self-insured part twp that gets maximum federal funding with the benefits of self-insurance.

Eric Stanger:

Barry did a great job of describing what we've seen and what, what he predicted we'll continue to see in the individual market in terms of continued strength and stability. And that's in large part driven by rising enrollment and to Trav's point large voting blocks, right? Which are essentially cementing a lot of the, the federal funding in those programs. And we've seen over the past couple of years, but we've seen quite a bit of volatility on the group, on the group Medicare side. We expect, while many plans are looking at to Barry's point, decoupling their medical from their prescription drug to save cost, we continue to expect and see that that volatility as well as the ongoing obligation to manage those plans and those two things together. And I think Trev, you made this point a little bit earlier and I'll make it again, and we are seeing the rationale for plan sponsorship of Medicare plans and, and in the group space declining.

Eric Stanger:

And we look back 20 years ago, there was no prescription drug coverage, so good rationale to provide that to your retirees. And since then, now we've got to, what you say, 80 plus percent actuarial value coverage of prescription drugs. That rationale just has essentially disappeared over the, over the past 20 years. We operate the largest individual marketplace. And so from our perspective, looking at and assessing an individual marketplace as a delivery vehicle for retiree medical is something that if an organization hasn't done it recently, we recommend taking a look at it. And of course, I think, Barry, you made the point for those organizations that are required particularly to, to continue offering group benefits, really look at all the, the sort of the levers you've got, including decoupling the medical from the prescription drug in order to optimize those programs.

Trevis Parson:

Just one comment, Eric, I think you're right. Look, there's a lot of folks out there are looking at this and maybe it's not a burning platform for change, right? Maybe they've limited their commitment to the group plan and given the increasing richness in the market and maybe the rating approach to the group plan, the calculus once upon a time may well have favored group and maybe even quite substantially. But today, in many cases, the fact of the matter is that even though it's not a burning platform necessarily for the plan sponsor, particularly one that's limited, its financial commitment, right? It sure as heck is a burning platform for participants who are likely begging for some more choice given the economic pressure leverage on to them on a fixed budget. And so I think folks ought to be thinking not only about, uh, you know, the impact to the financials, which actuaries like me always like to focus on, but you know what's for, what's right for these retirees. They've got good choices available to them, as Barry mentioned, and as you just reiterated. Yeah. Um, maybe, maybe thinking about that is, uh, is the right thing going forward, particularly for those who thought or are thinking, Hey, look, I don't have to do anything here. This plan's just kind of running on its own. But for retirees, it's really real.

Nina Krammer:

For more information or if you have questions for Trevis, Barry, or Eric, visit solutions dot via benefits.com/contact to connect with our team. You've been listening to The Via Benefits Exchange. For more information about Via Benefits and the solutions we provide, visit via benefits.com. That's viabenefits.com.