Medicare Advantage Plan Selection

By October 3, 2016Commentary

The beginning of the Medicare Advantage annual open enrollment period  is nigh.  A brief from the Kaiser Family Foundation examines how frequently enrollees switch plans during this enrollment period.   (KFF Brief)   The research looked at the period 2013 to 2014 and at plans that included drug coverage.  Of people enrolled in MA in 2013, only 2% went back to traditional Medicare and 3% died.  A total of 16% switched Medicare Advantage plans, but 5% of those were involuntary, as the plan they were in ceased being available.  Of the involuntary changers, 4% selected another MA plan and 1% went back to fee-for-service Medicare.  Since 2007 the rates of voluntary switching have been relatively constant at about 9%.  Among the largest MA plan vendors, switching rates are fairly consistent, although Kaiser Permanente has lower switching rates, probably partly due to the inability of enrollees to see Kaiser doctors if they are not in a Kaiser plan.  Younger enrollees were somewhat less likely to change their Medicare Advantage plan, but there was no difference between genders or between urban and more rural dwellers.  Dual eligibles were somewhat more likely to do so, which may be explained by their ability to change plans at any time during the year.  Beneficiaries in MA special needs plans did less switching, likely because they are satisfied with the more intensive care they need for their specific conditions.  One factor that clearly did influence changing plans was the premium rate.  29% of beneficiaries who faced a premium increase of $40 per month or more switched compared with only 11% of those with increases of $4 or less.  But most beneficiaries did not see premium increases of more than $10.  The point at which switching grows rapidly is an increase of over $20.  Enrollees who switched plans saved an average of almost $16 per month.  Quality also appears to be a factor, at least quality as measured by star ratings. 9% of enrollees in plans with 4 or more stars switched, compared to 14% in plans with a 2.5 or lower rating, but those switching tended to go into plans with only marginally better ratings.  PPO members switched more often than HMO ones.  All this data is undoubtedly particularly interesting to the MA plans, for persistence of members is associated with higher profit levels.

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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