Best’s Special Report

U.S. Medicare Supplement Continues to Gain Popularity

Net premiums rise 55% 20 $30 billion

New research from A.M. Bests reveals a higher number of lives covered.

OLDWICK, N.J., December 16, 2019—Net premiums earned for the Medicare supplement insurance line of business have risen 55% since 2011 to $30 billion annually, in line with growth in the senior population and the expansion of other Medicare-related products during this timeframe, according to a new AM Best report.

A new Best’s Special Report, titled, “U.S. Medicare Supplement—A Growth Segment,” notes that Medicare Advantage, Medicare supplement’s main competing product, has grown at a higher rate. However, as the number of Medicare beneficiaries continues to grow, AM Best expects individuals to continue to turn to private insurance to help cover their health care needs, and Medicare supplement or Medicare Advantage products are likely to see greater growth.

The growth in premiums can be attributed to the higher number of lives covered, with enrollment increasing by 45% to 13.2 million since 2011, and rising prices through rate increases. The shifting demographic also is favorable for the product, as nearly 20% of the U.S. population will be over the age of 65 by 2025, according to federal estimates, compared with approximately 15% in 2015. Rate increases in 2017 for Medicare supplement products were higher than average, causing an extra bump in premiums for the year, and remain a large contributor to the segment’s premium growth. Despite its growth, the Medicare supplement product line typically accounts for only a small portion of some companies’ total product mix, and just a handful of companies have a product mix with Medicare supplement concentrations of over 20%.

Highly Concentrated, Very Competitive

The top national players in this line of business, supplemented by small to midsize regional companies, have driven much of the segment’s growth, as it is highly concentrated and very competitive. At year-end 2018, 10 writers generated 70% of the segment’s net premiums, led by UnitedHealth Group.

The shifting demographic also is favorable for the product, as nearly 20% of the U.S. population will be over the age of 65 by 2025...

Like the traditional Medicare plans, Medicare supplement plans are labeled alphabetically. Plan F, the most popular plan, accounting for more than 50% of Medicare supplement premiums, will be taken off the market in 2020 due to The Medicare Access and Chip Reauthorization Act (MACRA). The shift between plan types could affect companies’ premiums and revenues. AM Best believes carriers, reinsurers, agents and marketing organizations will need to carefully consider the effects of pricing and selling approaches in 2020 and beyond.

To access the full copy of this special report, visit here.


AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit