Anthem and Kroger to launch Medicare Advantage plan marking further shifts in health care delivery

Anthem Blue Cross and Blue Shield and Kroger Health are teaming up to offer a Medicare Advantage plan next year. Anthem is seeking to gain market share in the Medicare Advantage space, which is dominated by United Healthcare. Kroger undoubtedly wants to create more reasons for people to walk into one of its 2,800 stores, most of which already operate pharmacies, by betting that senior citizens will receive care at the grocery store.

The fundamental opportunity is clear: Growth in Medicare Advantage exceeds that in the traditional health insurance and supermarket sectors many times over. Since 2014, Medicare Advantage enrollment has grown on a compounded annual basis of 7.3%, while the health insurance and supermarket sectors have grown by 4.7% and 0.7%, respectively.

Growth in Medicare Advantage enrollment doesn’t translate dollar for dollar into increased revenue in that space, which makes the comparison a little asymmetric. As more entrants vie for members, the economic opportunity per member will decrease. However, last month CMS reported 26.86 million seniors enrolled in a Medicare Advantage plan, or just about half the 54 million Americans over 65. While not all of those Americans would likely sign up for a Medicare Advantage plan, room may remain for companies like Anthem and now Kroger to grow memberships, especially as 10,000 Americans turn 65 daily.

This partnership is also an implicit bet that older Americans are willing to disrupt their traditional patient/doctor relationship. Rather than seeing a primary care physician in the doctor’s office, these members would presumably be nudged to see a pharmacist, nurse practitioner or other midlevel provider in one of Kroger’s on-site clinics or pharmacies. Minute clinics and the like have grown in popularity over the years, despite concerns over care quality, and countries like the U.K. have successfully leveraged pharmacists to provide more primary care services.

The telehealth question

The billion-dollar question is will seniors skip physical care when possible and opt for telehealth? The pandemic improved older Americans’ willingness to use telehealth, a surprise to many observers who assumed seniors would eschew technology completely. Amazon and Walmart are betting big that Americans, including seniors, will embrace virtual care. The Anthem-Kroger partnership does not appear to make the same bet.

The takeaway

Whatever the future holds, it seems likely that volumes will continue to shift out of the hospital and physician offices, and that outsiders such as Walmart, Amazon and Kroger will seek to capitalize on that disruption.

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