(Bloomberg) -- The health insurance industry is betting that adifferent government program will soothe its ills after the turmoilaround the Affordable Care Act.

As big insurers have retreated from Obamacare’s individual market, they’re focusinginstead on Medicare Advantage, a politically popularprogram that’s being embraced by a growing population of olderAmericans.

The market is dominated by two large players: No. 1 UnitedHealthGroup Inc. has seen the number of people enrolled in its MedicareAdvantage plans climb by 23 percent over the past year to 4.8million, while No. 2 Humana has held steady at 3.3 million.

Both Obamacare and Medicare Advantage give consumers assistanceto buy a health plan of their choosing.

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

Obamacare has been a much more mixed proposition. The relativelyyoung law has come with an unending political headache, asRepublicans have vowed to tear it out by the roots and PresidentDonald Trump made its repeal a centerpiece of his presidentialcampaign.

That opposition to the law culminated this month withRepublican’s failed repeal effort, yet the administration still hasoptions 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 tosome disabled individuals.

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

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

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

“It’s both fundamentals and it’s policies,” said Ana Gupte, ananalyst at Leerink Partners. “There’s bipartisan support, butfundamentally also it’s a large, growing and profitablemarket.”

Medicare Advantage enrollees are insurers’ favorite kind ofcustomers -- they stick around. Once they select a plan, they tendto 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 changedplans for 2017, compared with 39 percent in Affordable Care Actplans.

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

“There’s just a real strong overall value proposition withMedicare Advantage,” Steven Nelson, the CEO of UnitedHealth’sinsurance operation, told investors on July 18. “We’re seeing thatnot only just with the folks that we serve, but as we talk topolicymakers, too, there’s really strong support for it.”

Humana’s Medicare membership stagnated this year as the insurerpulled back from some markets and held benefits steady in an effortto improve profits.

The effort succeeded in boosting earnings, and Humana said onWednesday it plans to improve the appeal of its products for nextyear, boosting membership growth.

Major health insurers have benefited from minimizing theirexposure to Obamacare.

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

Startups circling

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

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

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

Vivek Garipalli, Clover’s CEO, says the Medicare Advantagebusiness model lets his insurer profit by taking better care ofcustomers.

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

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

“The exchange market, at least for Clover and the way we thinkabout building our business, the churn is just really really highin individual insurance,” he said. “It didn’t really fit our modelbecause 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 147counties across 14 states, according to an analysis from the KaiserFamily Foundation.

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

Playing catch-up

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

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

Cigna told investors on June 21 that making deals to increasesales to the U.S. senior population was among its top M&Apriorities.

Medicaid specialist Centene Corp. is expanding in six newmarkets next year for Medicare Advantage plans, with a focus onlow-income seniors.

Aetna, after being forced to scuttle a deal for Medicarespecialist Humana, is working to expand its footprint, with a goalof eventually reaching 75 percent to 80 percent of seniors, up from60 percent next year.

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

“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 havein the market” next year.

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