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New Medicare Beneficiaries and Medicare Advantage

By June 10, 2019Commentary

When people become eligible for Medicare they may have several current statuses in regard to health coverage.  Most people probably have had employment-based health plans.  Some may have had individually-purchased private health coverage.  Low-income adults may have had Medicaid coverage.  As people become eligible for Medicare, they can either go into the traditional, fee-for-service branch or they can enroll in a Medicare Advantage plan.  FFS Medicare is pretty wide-open in terms of provider selection and lack of constraints on choice of treatment.  Medicare Advantage may have network limitations and more utilization management, but typically removes cost-sharing and offers benefits beyond those covered by traditional Medicare.  Trends in choices made by new Medicare beneficiaries is the subject of a new Kaiser Foundation brief.   (KFF Brief)   KFF had issued similar brief in 2011 and found that about 23% of new beneficiaries selected Medicare Advantage.  The updated briefs looked at enrollment trends from 2010 to 2016.  In 2016, 29% of new beneficiaries selected Medicare Advantage plans.  That is over a 25% increase from 2011.  But it is lower than the current 34% of all beneficiaries who are in MA, suggesting that more people switch after their first year on Medicare, and possibly that there is a low level of disenrollment.  The rate of MA enrollment varies widely by state.  In Oregon, Minnesota and Puerto Rico, more than 40% of new beneficiaries enrolled in an MA plan, with the share actually being 81% in Puerto Rico and 59% in Minnesota.  At the other end of the spectrum, in Delaware, Maryland, Nebraska, New Hampshire, Vermont and the District of Columbia, less than 11% of new members enrolled in Medicare Advantage.  This may be due to a perception of limited or poor choices among plans.  States that have the most population tended to have higher rates of enrollment, such as California at 37%, Texas at 30%, Florida at 39% and New York at 35%.  Those states also have more alternatives for potential MA enrollees to choose among.  And obviously, if a county or state already has a large MA penetration rate, it is more likely to have a high rate of new beneficiaries choosing MA.  If a county has more than 50% penetration of MA, 52% of new beneficiaries in the county choose MA.  Counties with higher population also tend to have higher choice of MA as the initial Medicare option.  But again, this is likely correlated with number and quality of plan choices.  People who have been on Medicaid and those who get Medicare because they are disabled are less likely to choose MA in their first year of Medicare.  This suggests that those who have had employment-based coverage, and therefore been in a managed care plan, are more likely to choose MA.   Overall, the brief supports the perspective that MA continues to grow in popularity for beneficiaries.

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