UnitedHealth and CVS: Dominating the $21 Billion Medicare Advantage Surge

The Medicare Advantage (MA) market is surging, with a projected $21 billion in growth by 2026. Two major players, UnitedHealth Group (UNH) and CVS Health (CVS), are well-positioned to capitalize on this growth and maintain their market dominance. Their strategic focus on expanding market reach, improving quality, and innovating through value-based care initiatives has set them apart in the competitive landscape.



UnitedHealth Group, the nation's largest MA insurer, has consistently led the market in enrollment. In 2023, it accounted for nearly two in three new enrollees (44%) by for-profit insurers (The Chartis Group). CVS Health also experienced strong growth during the 2024 MA open enrollment, expecting its total MA membership to grow by at least 800,000 (CVS Health regulatory filings, Jan. 5, 2024). Both companies have demonstrated their ability to adapt to regulatory changes, such as the risk adjustment changes announced by CMS in 2023, using these changes as opportunities to improve their offerings and maintain their market dominance.



UnitedHealth and CVS have also focused on improving their star ratings and quality, which is crucial for attracting and retaining members. UNH has maintained a strong focus on improving its star ratings, with 87% of Aetna's membership enrolled in plans rated four stars or higher in 2024, up from 21% in 2023 (CVS Health regulatory filings, Jan. 5, 2024). CVS has also seen improvements in its MA star ratings, with 87% of its membership enrolled in plans rated four stars or higher in 2024. These improvements in quality and member satisfaction have helped both companies maintain their market dominance.



Innovation and value-based care initiatives have been another key factor in the growth strategies of both UNH and CVS. UNH has invested in its Optum division, which focuses on improving consumer engagement, digital-first technology, and value-based arrangements. The company expects to have more than 4 million consumers in value-based arrangements in 2024 (UNH investor guidance, Nov. 29, 2023). CVS has also been investing in innovative care models, such as its MinuteClinic and HealthHUB locations, to provide more comprehensive and convenient care for MA members. These investments in value-based care have allowed both companies to better manage their members' health needs and reduce overall healthcare costs.



In conclusion, UnitedHealth and CVS are well-positioned to dominate the $21 billion Medicare Advantage surge due to their strategic focus on expanding market reach, improving quality, and innovating through value-based care initiatives. Their ability to adapt to regulatory changes and maintain their market dominance has set them apart in the competitive landscape. As the MA market continues to grow, investors can expect these two companies to remain at the forefront of the industry.