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Insuring Your Health

Study Disputes Perception That New Beneficiaries Are Fueling Medicare Advantage Growth

The majority of people who signed up for Medicare Advantage plans in recent years were switching out of the traditional Medicare program, according to a recent study. The findings contradict the popular belief that growth in Medicare Advantage has been fueled primarily by people who choose it when they first become eligible for Medicare.

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The private Medicare Advantage plans are an alternative to traditional Medicare, and often provide additional services such as gym memberships or vision and dental benefits not included in the regular program. But they also generally require beneficiaries to stay within the plan’s network of doctors, hospitals and other providers. The federal government pays the plans to help cover the cost of benefits.

“The prevailing thought was that baby boomers were enrolling in Medicare Advantage plans at a higher rate because they were more familiar with managed care and it was what they experienced in employer plans,” says Gretchen Jacobson, associate director of the Program on Medicare Policy at the Kaiser Family Foundation and lead author of the study, which was published in the January issue of Health Affairs. (KHN is an editorially independent program of the foundation.)

For the study, researchers tracked Medicare claims data between 2006 and 2011. Each year more than half of Medicare Advantage enrollees switched in from the traditional Medicare program. The number was 52 percent in 2011, a slightly lower number than the previous year.

Overall, 30 percent of Medicare beneficiaries are in Medicare Advantage plans. Beneficiaries can switch types of plans during open enrollment each fall.

Beneficiaries in their mid- to late-60s made up the largest share of those who switched from traditional Medicare to Medicare Advantage, the study found.

“Younger Medicare beneficiaries may have fewer health conditions, so they may be more willing to restrict their provider network in a trade-off for having extra benefits,” says Jacobson.

The health law reduced funding for Medicare Advantage between 2012 and 2016, leading to predictions by some that increased cost sharing and eroding benefits would lead to declining enrollment.

So far that hasn’t happened.

“Given that enrollment has continued to grow and there haven’t been major changes in premiums or availability of plans, many project that growth will continue,” says Jacobson.

Please contact Kaiser Health News to send comments or ideas for future topics for the Insuring Your Health column.

This article was produced by Kaiser Health News with support from The SCAN Foundation.

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