But under Medicare Advantage the government picks up much of the cost, ensuring a steady revenue stream for insurers. Plan premiums, which are largely paid by the government, average almost $1,000 a month.

Obamacare has been a much more mixed proposition. The relatively young law has come with an unending political headache, as Republicans have vowed to tear it out by the roots and President Donald Trump made its repeal a centerpiece of his presidential campaign.

That opposition to the law culminated this month with Republican’s failed repeal effort, yet the administration still has options to sabotage the law -- and has threatened to do so.

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Aging Americans

Medicare Advantage is the private version of the U.S. government’s Medicare program for the elderly. It’s also open to some disabled individuals.

As the U.S. population ages, more retirees are opting for such plans over traditional Medicare. About a third of Medicare beneficiaries, or roughly 20 million people, were covered by the private plans as of June, according to the Centers for Medicare & Medicaid Services.

That makes Medicare Advantage one of the few areas of expansion in an otherwise stagnant industry.

And its popularity could insulate it from Washington caprice: Seniors are a powerful voting bloc, so margin-threatening political changes are less likely than in businesses like Obamacare.

“It’s both fundamentals and it’s policies,” said Ana Gupte, an analyst at Leerink Partners. “There’s bipartisan support, but fundamentally also it’s a large, growing and profitable market.”

Medicare Advantage enrollees are insurers’ favorite kind of customers -- they stick around. Once they select a plan, they tend to stay enrolled for years.

Obamacare users by contrast are often in and out of the market, and tend to shop every year for the lowest price.

A UBS survey found that 12 percent of Medicare enrollees changed plans for 2017, compared with 39 percent in Affordable Care Act plans.

Gupte estimates that by 2020, half of the growing number of Medicare beneficiaries will be in Advantage plans -- some 38 million people in all. UnitedHealth has a similar outlook.

“There’s just a real strong overall value proposition with Medicare Advantage,” Steven Nelson, the CEO of UnitedHealth’s insurance operation, told investors on July 18. “We’re seeing that not only just with the folks that we serve, but as we talk to policymakers, too, there’s really strong support for it.”

Humana’s Medicare membership stagnated this year as the insurer pulled back from some markets and held benefits steady in an effort to improve profits.

The effort succeeded in boosting earnings, and Humana said on Wednesday it plans to improve the appeal of its products for next year, boosting membership growth.

Major health insurers have benefited from minimizing their exposure to Obamacare.

All six for-profit health plans in the Standard & Poor’s 500 Index reported second-quarter earnings that beat analysts’ estimates, and the S&P Managed Health Care Index of insurer stocks is up more than twice as much as the broader index this year.

Startups circling

As big insurers aim to expand their share of the market, investors have poured money into startups targeting Medicare Advantage.

Clover Health, which offers the plans in New Jersey, raised $130 million at a $1.2 billion valuation in a recent funding round.

Bright Health, which is making a big push into Medicare plans by teaming up with hospital systems, has raised a total of $240 million from investors.

Vivek Garipalli, Clover’s CEO, says the Medicare Advantage business model lets his insurer profit by taking better care of customers.

“You have a direct correlation with improving someone’s long-term outcomes and generating higher margins,” he said. “Our customers are with us for a long time.”

Garipalli said that his company won’t be selling Obamacare plans anytime soon. That’s in part because of the political threats the program faces, and because Obamacare customers switch plans so frequently.

“The exchange market, at least for Clover and the way we think about building our business, the churn is just really really high in individual insurance,” he said. “It didn’t really fit our model because it’s hard to build an outcomes-focused business.”

Despite the potential for growth and profits nationally, insurers have avoided offering Medicare Advantage plans in 147 counties across 14 states, according to an analysis from the Kaiser Family Foundation.

Obamacare offerings are far more comprehensive -- 19 counties are at risk of having no insurer options next year.

Playing catch-up

Cigna Corp., Aetna Inc. and Anthem Inc. all say that growing in Medicare Advantage is a top priority, either by building their businesses on their own or by acquiring smaller firms that have been racing to grab a slice of the market.

Anthem said last week that it’s looking at deals for Medicare Advantage firms to “augment our growth profile.”

Cigna told investors on June 21 that making deals to increase sales to the U.S. senior population was among its top M&A priorities.

Medicaid specialist Centene Corp. is expanding in six new markets next year for Medicare Advantage plans, with a focus on low-income seniors.

Aetna, after being forced to scuttle a deal for Medicare specialist Humana, is working to expand its footprint, with a goal of eventually reaching 75 percent to 80 percent of seniors, up from 60 percent next year.

Aetna’s overall government business, which includes Medicare and the Medicaid program for the poor, already accounts for half the company’s revenues, and Aetna says Medicare will keep growing quickly.

“We’re trying to grow as fast as we reasonably can in Medicare.” Aetna Chief Financial Officer Shawn Guertin said in an interview. “I’m optimistic about the competitive positioning that we’ll have in the market” next year.

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