News & Commentary

Medicare Advantage Growth Is a Mix


Frank Diamond

The growth in Medicare Advantage (MA) enrollment is coming both from people switching out of traditional Medicare and from beneficiaries new to Medicare, according to a study published in the January 2015 issue of Health Affairs.

In 2011, 52% of new MA enrollees switched out traditional Medicare to join the plans and 48% were newcomers to Medicare who went directly into an MA plan, according to Kaiser Family Foundation researchers.

In past years, the switchers accounted for a greater percentage of new MA enrollees, and the Kaiser researchers reported that the percentage of new Medicare beneficiaries going right into MA has been inching upward, from 15% in 2006 to 22% in 2011.

The researchers also examined the early effect of the ACA on MA. Many predicted that ACA-mandated payment reductions would make MA enrollment decline because the benefit packages would be less rich. The MA plans often include vision and dental benefits and even, for some, gym memberships. But in the early going, that decline didn’t happen.

Some experts argue that the full sting of payment reductions has yet to be felt, thanks to a quality-based demonstration project that ended last year. The project blunted the effects of the payment reductions by increasing the size of bonus payments and extending bonuses to plans rated as average or better, according to the Kaiser researchers.

Despite all the switching into MA, the researchers note that most enrollees have a tendency to stick with their original choice. Gretchen Jacobson, associate director of the Program on Medicare Policy at the Kaiser Family Foundation and lead author of the study, realizes that sounds like a contradiction.

“Only about 5% of people, on average, in traditional Medicare switch to Medicare Advantage. The vast majority of people in traditional Medicare do not make a change,” she tells Managed Care. “However, that 5% is a larger number of people than the number of beneficiaries new to Medicare who enroll directly into Medicare Advantage each year.”

The appeal of MA might be convenience and extra benefits. The appeal of traditional Medicare has been the freedom to choose providers without having to worry about a network.

“For all beneficiaries, the burden of researching new coverage options and making a change, coupled with the fear and uncertainty about the effects of making a change, may be major deterrents to switching,” says the study.