Medicare Advantage enrollment has seen a significant increase over the past two decades, with more than 32.8 million people enrolled in a Medicare Advantage plan in 2024. This accounts for over half of the eligible Medicare population and a substantial portion of federal Medicare spending. The growth in enrollment can be attributed to various factors, including the availability of plans with no premium (other than the Part B premium) and the extra benefits offered by most Medicare Advantage plans, such as coverage for dental, vision, and hearing services.
One of the key attractions of Medicare Advantage plans is the financial protection they offer through an out-of-pocket limit, which traditional Medicare lacks. However, Medicare Advantage plans also come with limitations, such as restricted provider networks and cost management tools like prior authorization. Despite these limitations, research shows that Medicare pays more to private Medicare Advantage plans than their costs would be in traditional Medicare, resulting in higher spending.
The concentration of Medicare Advantage enrollment is high among a few key firms, with UnitedHealthcare and Humana accounting for nearly half of all Medicare Advantage enrollees nationwide. These firms have consistently held a significant share of enrollment, with UnitedHealthcare experiencing the largest growth in enrollment since 2010. Other firms like CVS Health and Kaiser Permanente have also seen growth in their share of enrollment over the years.
Medicare Advantage enrollment varies across states and counties, with some states having a higher penetration of Medicare Advantage plans than others. In counties with high Medicare Advantage penetration, factors like firm strategies, urbanicity, payment rates, and historical market penetration play a role in influencing enrollment rates. The availability of different types of Medicare Advantage plans, such as individual plans, special needs plans, and group plans offered by employers or unions, also contributes to the overall enrollment landscape.
Overall, Medicare Advantage enrollment continues to grow, with projections indicating that the share of all Medicare beneficiaries enrolled in Medicare Advantage plans will continue to rise in the coming years. As policymakers focus on the efficiency and cost-effectiveness of Medicare Advantage, understanding the trends in enrollment and the factors influencing enrollment patterns is crucial for shaping the future of the program.