- Almost 30% of new beneficiaries chose to enroll in privately-run Medicare Advantage plans in their first year of Medicare in 2016, according to a new analysis from Kaiser Family Foundation — slightly higher than the 23% in 2011. The majority of beneficiaries selected traditional Medicare plans.
- MA's popularity varies considerably based on state. More than 40% of beneficiaries selected MA plans in Oregon and Minnesota. Less than 11% selected them in Delaware, Maryland, New Hampshire, Nebraska, Vermont and Washington, D.C.
- Although the industry has largely expected the popularity of MA plans to increase, this new evidence that the majority of new beneficiaries are opting for traditional Medicare suggests the hype may be somewhat overblown.
MA is in vogue right now, with advocates touting the expanded benefits of the privately run plans. CMS has increased the regulatory flexibility around MA, allowing payers to cover social determinants of health and supplemental benefits like transportation, caregiver support and carpet cleaning for people with asthma.
MA also represents a potential cash cow for payers. In early April, CMS increased the payment rates for MA by 2.5%, almost one full percentage point higher than the increase the agency proposed in December.
Over the past decade, membership in Medicare Advantage has roughly doubled from 11.1 million in 2010 to 22 million in 2019. One-third (34%) of all Medicare beneficiaries are enrolled in MA. Enrollees are selecting MA in their first year at the same rate as enrollees are selecting MA nationwide.
The KFF analysis runs somewhat counter to industry excitement about the growth and potential of the privately run plans. The Congressional Budget Office projects a steady growth in MA enrollment over the next decade, rising to almost 47% of all Medicare enrollees by 2029.
But "even with an aging Baby Boom Generation, the majority of new beneficiaries are opting for traditional Medicare in the year they first go on Medicare," KFF researchers wrote. "While Medicare Advantage enrollment among new beneficiaries is rising, these findings suggest that ongoing attention to traditional Medicare is needed to meet the needs of the lion’s share of the Medicare population."
As it stands, the Medicare Part A trust fund is expected to run out by 2026, largely due to the more than 10,000 Americans that age into Medicare every day and correlated increases in the volume and intensity of healthcare services.
Medicare spending is expected to snowball to 6% of GDP over the next two decades, up from its 2018 level of just 3.7%, according to the Medicare board of trustees.
MA plans were more successful with new Medicare beneficiaries in counties that already had high penetration of MA plans. KFF found in counties that had over half of beneficiaries in MA, 52% of new beneficiaries enrolled in MA. Contrastingly, in counties with 10% or fewer beneficiaries in MA, only 5% enrolled in MA in their first year.
New beneficiaries are also more likely to enroll in MA in areas with more Medicare beneficiaries. Counties with more than 100,000 Medicare beneficiaries and counties with 5,000 or fewer Medicare beneficiaries saw roughly one-third and one-fifth of new Medicare beneficiaries enrolling in MA, respectively.