美国医疗服务：我们关于Medicare Advantage的内部培训总结

US Healthcare Services: A summary of our teach in on MedicareAdvantage We kicked off our Summer Healthcare Teach In Series last Friday, providing an overview ofMedicare Advantage, its history, policy and margin impacts, and future outlook(replay hereand slides here). This note provides key takeaways from our session. We will continue our Summer Teach In series with a session on Optum Health (6/18)at 11am ET(Click here to register); Insurance cycle- We see the recent negative margins in MA as having been the result ofa traditional insurance cycle driven by excessive competition. Revenue growth rates in the15-20% range during 2005-2015 and margins of around 5% attracted a significant amountof additional competition. This competition lead to reduced margins and set the stage for amargin crisis as rates shocks occurred. We see MA margins inflecting after a trough period.Following a period of margincompression, we expect industry MA margins to expand ~1% in 2026, followed by ~0.5%annual growth through 2030. This recovery is driven by a withdrawal of competition, rateimprovement off 2024–25 lows, and an industry focus on pricing for profitability. MA growth remains durable, but is moderating.Moving forward, we expect MAenrollment to grow at a ~4–5% pace. The value proposition remains compelling with MAoffering enhanced supplemental benefits for beneficiaries and structurally lower costsversus FFS for the government. We ultimately see MA capturing virtually all the Medicaremarket. The long-term Government MCO market will trend “utility-like.”Over time, we expectboth MA and Medicaid to resemble utility-like markets, consolidating around ~4–5 scaledplayers and operating with relatively modest margins (~1.5% for Medicaid; ~2–3% for MA). Key disruptors include GLP-1s, AI, and VBC. GLP-1s will contribute to rising pharmacycosts, but offer the potential of increasing life span, potentially expanding Medicare TAMby 5-10%. AI offers the opportunity to improve the efficiency of hospital operations andpatient care. VBC will become increasingly central as margin pressure persists, driven byour view that reimbursement rates will lag medical cost trend by ~100–150 bps long-term. Affordability and access will dominate the policy debate.Policy focus is increasinglycentered on affordability and coverage expansion. Medicare for All appears less viable thanin prior cycles, particularly with MA now representing ~55% of Medicare enrollment vs. ~1/3during earlier reform debates. We expect a Democratic push to restore the uninsured rate toaround the 5% level, from what we see could drift towards a potential 9% by 2028. BERNSTEIN TICKER TABLE INVESTMENT IMPLICATIONS We rate AGL Market-Perform with a target price of $86, CNC Outperform with a target price of $68, CI Outperform with a targetprice of $371, CVS Outperform with a target price of $106, ELV Outperform with a target price of $424, HCA Market-Performwith a target price of $413, HUM Outperform with a target price of $425, and UNH Outperform with a target price of $492. DETAILS WHAT IS MEDICARE ADVANTAGE? Medicare covers about 20% of the population.Medicaid and safety net programs cover ~30% and employer ~50%.However, the amount of spend on Medicare is larger than its proportion of members due to the increased medical spend by thesenior population. EXHIBIT 1:Where Medicare fits into health insurance coverage Medicare has ~70m enrollees, with 90% being 65 years old or older and the remainder being disabled. The Medicarepopulation is a growing population, with an age-in growth rate around 5.5% and a mortality rate around 4.5%. Increasing lifeexpectancy, potentially influenced by GLP-1s, is poised to be a tailwind for Medicare member growth. Virtually all the growth inthe Medicare population since the 1990s has been in Medicare Advantage, with traditional Medicare staying flat. EXHIBIT 2:MA market size UNH is the largest player in the MA space.UNH and HUM have been the #1 and #2 players for a decade, with CVS being aconsistent #3. There is a long tail of other competitors in the space, with the big 3 players representing ~55% of the market. It isa relatively fragmented market, but our long-term view is the industry becoming utility-like, with 4-6 large, scaled players. Source: CMS, Company reports, Bernstein analysis THE MA PRODUCT, DISTRIBUTION, AND VALUE PROPOSITION Value proposition of MA. In general, traditional medicare pays for 80% of healthcare costs and the patient pays for 20%.Members have to purchase stand-alone drug coverage and supplemental insurance to pay for the remainder. MA plans cover these extra expenses, usually have out of packet maximums, and provide supplemental benefits like vision, dental, and hearingaids. Source: Bernstein analysis Financial elements are generally the highest priority buying criteria for consumers.65-70% of the MA market haszero premiums, and the remainder generally has a small premium. A second concern for consumers