UnitedHealth–the country’s largest health insurer provider–is well-positioned to benefit from rising baby boomers signing up for federal-funded healthcare plans.

Enrollment for Medicare Advantage, health coverage for people 65 or older, is expected to grow by an additional 2.4 million members by the end of next year, according to a press release last Tuesday by the Center for Medicare and Medicaid Services. The federal health agency also posted that next year’s premium is estimated to slightly increase.

As America gets older and more seniors sign up for health plans, UnitedHealth is forecasted to grow its profitable MA business by luring new customers to its unit while shrugging off higher premiums. 

“For 2024, UnitedHealth is in a position to grow enrollment above the industry with superior Star [ratings] dynamics,” wrote Jefferies senior analyst David Windley in his note.

UnitedHealth is expected to grow its MA enrollment by under a million in 2023, said the company’s CFO John Rex during last July’s second-quarter earnings call. The company has the largest MA enrollment compared to its competitors, controlling almost a third of the market share, and will continue to add its dominance in the space as more seniors sign up for health plans.

UnitedHealth’s MA business could generate additional profits by receiving federal bonus payments for new members who receive at least four stars on a 5-star rating scale, which measures the quality of health plans.

CMS also announced increasing premiums and supplemental benefits for MA plans in 2024 that could eat away at the company’s margins and enrollment growth. 

“That could impede the growth and profitability of the Medicare Advantage market in the next few years,” Morningstar senior analyst Julie Utterback wrote in an email in response to CMS’s recent actions.

Moreover, a boost in benefits could lead to higher utilization and costs, which would impact UnitedHealth and other insurers’ margins. “If plans did indeed increase benefits, their ability to preserve margin while chasing growth is a valid question,” noted Windley. 

However, other analysts aren’t too worried about CMS next year’s changes. Average monthly premiums are estimated to rise by 3.6% in 2024, but are perceived as “immaterial in the context of the total MA funding environment,” wrote TD Cowen analyst Gary Taylor in a note.

There’s strategic value in insurers’ reluctance to raise premiums in MA plans, said Taylor. The strategy is to lure new MA members in by offering competitive prices, not increasing them, as open enrollment begins on Oct. 15.

UnitedHealth closed Friday at $504.19, down by 1.16% on that day, and the stock shed by 2.79% this year.