Traditional Medicare to Medicare Advantage Switching Rates Grew in 2020

The share of beneficiaries who switched from traditional Medicare to Medicare Advantage in 2020 exceeded the switching rate from Medicare Advantage to traditional Medicare, contributing to Medicare Advantage enrollment growth.

The Medicare Advantage share of overall Medicare enrollment grew from 19 percent in 2007 to 46 percent in 2021 and is expected to exceed 50 percent by 2023. This growth has been associated with new enrollees choosing Medicare Advantage and more current beneficiaries switching from traditional Medicare to Medicare Advantage.

Meanwhile, high-need beneficiaries have seen higher rates of switching from Medicare Advantage to traditional Medicare, shifting financial risk to the Medicare Trust Fund. As Medicare Part A is projected to reach insolvency by 2026, researchers assessed switching behavior trends among beneficiaries.

The study, published in JAMA Health Forum, reflected data from the 2014 to 2020 CMS Master Beneficiary Summary File Limited Data Sets.

In 2016, switching rates from Medicare Advantage to traditional Medicare were higher than those for traditional Medicare to Medicare Advantage. However, the trend was reversed from 2017 through 2020.

In 2017, 3.7 percent of beneficiaries switched from Medicare Advantage to traditional Medicare compared to 5.3 percent of beneficiaries switching from traditional Medicare to Medicare Advantage. The gap was larger in 2020, with 2 percent of beneficiaries switching from Medicare Advantage to traditional Medicare and 6.8 percent switching the opposite way.

The traditional Medicare to Medicare Advantage switching rate was almost four times higher than the Medicare Advantage to traditional Medicare switching rate for Medicare-only beneficiaries (6.1 percent versus 1.6 percent) and 2.5 times higher for dual eligible beneficiaries (11.2 percent versus 4.5 percent).

The high share of beneficiaries switching from traditional Medicare to Medicare Advantage contributed to a new Medicare Advantage enrollment growth, which rose from 49 percent in 2016 to 67 percent in 2020.

Switching rates differed among certain populations, the study found.

For example, among Medicare-only and dual eligible beneficiaries, switching rates generally declined as beneficiaries got older. This held true for switching from traditional Medicare to Medicare Advantage and vice versa.

Mortality status also impacted switching rates. In 2016, beneficiaries in their last year of life were more likely to disenroll from Medicare Advantage (5.4 percent) than from traditional Medicare (2.6 percent). In 2020, the trend reversed, with 3.1 percent of beneficiaries in their last year of life disenrolling from Medicare Advantage compared to 5.1 percent disenrolling from traditional Medicare.

Black and Hispanic beneficiaries had higher switching rates compared to White beneficiaries. These beneficiaries were more likely to switch from traditional Medicare to Medicare Advantage in 2016 and 2020.

In 2020, Black (13.4 percent) and Hispanic (13.5 percent) beneficiaries were more than twice as likely to disenroll from traditional Medicare compared to White beneficiaries (5.9 percent).

Switching rates among all Medicare beneficiaries helped contribute to Medicare Advantage enrollment growth.

“Switching may be associated with changes in health status, inclusion of additional services in MA, cost considerations, and access to specialized healthcare clinicians,” researchers wrote.

“The observed trends may reflect a growing importance of access to non-TM benefits in MA, cost considerations among beneficiaries, and divergence in the enrollment preferences of Black and Hispanic beneficiaries compared with White beneficiaries.”

Research from the Kaiser Family Foundation (KFF) found that Medicare Advantage and traditional Medicare plans reported similar satisfaction rates. However, Medicare Advantage beneficiaries were more likely to utilize preventive care services and have a usual source of care, while traditional Medicare beneficiaries experienced fewer cost-related problems.

The growth in Medicare Advantage enrollment may stem from its supplemental offerings that traditional Medicare lacks. Commonwealth Fund data found that almost a quarter of older Medicare Advantage beneficiaries chose the private program for its additional benefits, such as vision and dental coverage.