Medicare Advantage growth persists ahead of open enrollment

Trends in Medicare Advantage plan selection

The most common patterns can provide some insight into consumer preferences, typical payer offerings and successful payer strategies. For example, nearly all Medicare Advantage enrollees are in a plan that combines Medicare Advantage and Part D coverage (98%). Medicare Advantage plans' ability to combine multiple types of Medicare coverage is a distinguishing factor.

Also, more than half (56%) of all Medicare Advantage members are in health maintenance organizations. HMOs boast the lowest cost for members compared to other types of health plans but also have more limited offerings. In contrast, 43% of members are in preferred provider organization plans.

On top of these plan selection data points, demographic data clarifies the image of the typical Medicare Advantage enrollee. Black, Latino, and Asian Medicare-eligible Americans were more likely to choose Medicare Advantage plans than white beneficiaries. Around three in ten Medicare Advantage enrollees come from one of these three demographics. In contrast, less than one in five fee-for-service Medicare enrollees are Black, Latino, or Asian.

Additionally, lower-income individuals continue to dominate the Medicare Advantage population. A little over half of all Medicare Advantage beneficiaries have incomes that fall below 200% of the federal poverty level.

Income is a key factor in social risk, so with over 52% of Medicare Advantage beneficiaries living on less than $24,500 per year it might come as no surprise that the social risk factors for this enrollment population are also high.

For example, Medicare Advantage enrollees are more likely to live in socially vulnerable counties. Medicare Advantage beneficiaries are more likely to experience food insecurity than fee-for-service Medicare enrollees (17% versus 11%). This population is also 20% more likely to live in an area impacted by natural disasters. And four out of ten rural Medicare-eligible individuals choose Medicare Advantage.

Beneficiaries value access to care, quality of care, affordability

A couple of well-documented differences in the qualities of Medicare Advantage plans -- qualities that are often placed in contrast with fee-for-service Medicare -- might have contributed to the increase in Medicare Advantage enrollment, Better Medicare Alliance explained.

Access to care was strong among Medicare Advantage beneficiaries. Beneficiaries found themselves with more options: 99.7% were eligible for at least one Medicare Advantage plan in their areas and on average most beneficiaries had access to 43 plans. Even in rural areas, which historically have had limited plan possibilities, access to Medicare Advantage coverage was strong with triple the number of plans offered in rural areas in 2024 compared to 2018.

Quality of care was highly rated in Medicare Advantage, which could lead to positive enrollment trends. Most members (95%) were satisfied with the quality of care they received and 95% have a usual source of care. Their confidence was reflected in the strong average star rating for a Medicare Advantage-Part D (MA-PD) plan -- 4.04 stars.

Affordability is another attractive quality for these plans. Medicare Advantage beneficiaries had lower out-of-pocket costs and lower cost of burden than fee-for-service Medicare contemporaries. The average monthly premium totaled $18.50 with three-quarters of beneficiaries being in a zero-dollar premium MA-PD plan.

Supplemental benefits are another big draw to Medicare Advantage. Nearly all beneficiaries had access to dental, hearing, vision, wellness, telehealth and meal benefits. Additionally, 96% of respondents could receive transportation assistance.

Certain population-related trends might also be responsible for Medicare Advantage growth, such as higher enrollment among employees and beneficiaries with certain chronic conditions.

Medicare Advantage support from employers has boosted Medicare Advantage growth. The number of employees enrolled in Medicare Advantage plans through Employer Group Waiver Plans (EGWPs) grew by nearly 2 million from 2017 to 2024. In 2024, EGWP enrollment encompassed 5.7 million people.

Additionally, more individuals with end-stage renal disease (ESRD) are choosing Medicare Advantage plans. Only a quarter of individuals with this condition had selected Medicare Advantage plans at the end of 2020. But by 2024, nearly half of all such beneficiaries were enrolled in Medicare Advantage (47%).

Special needs plan access increased by 4% and enrollment grew by 14% from 2023 to 2024. Dual special needs plan enrollment tripled in the last decade.

As payers go into a new open enrollment season, they might expect continued Medicare Advantage growth despite the policy- and provider-related headwinds they have faced in 2024.

Kelsey Waddill is a managing editor of Healthcare Payers and multimedia manager at Xtelligent Healthcare. She has covered health insurance news since 2019.