Over the past two decades, Medicare Advantage plans have become an increasingly popular option for seniors looking to get Medicare benefits. In 2022, more than 29 million Medicare beneficiaries were enrolled in Medicare state health insurance assistance programs through Advantage plans, accounting for nearly 50% of the total Medicare population. This reflects a dramatic shift, considering only 13% of Medicare beneficiaries were enrolled in Medicare Advantage plans back in 2004.
So why are so many seniors now choosing Medicare Advantage plans over original Medicare? What are the key factors driving this growth? And what percentage of the senior population is expected to be in Medicare Advantage plans moving forward? This blog post will explore the rising popularity of Medicare Advantage and break down the latest statistics on Medicare Advantage enrollment among seniors.
An Overview of Medicare Advantage in 2023
But first, what exactly is Medicare Advantage? Medicare Advantage, also known as Medicare Part C, refers to private insurance plans that contract with Medicare to provide all Part A and Part B benefits. Medicare Advantage plans include:
- Health Maintenance Organizations (HMOs)
- Preferred Provider Organizations (PPOs)
- Private Fee-for-Service Plans (PFFS)
- Special Needs Plans (SNPs)
In contrast to original Medicare, which is administered directly by the federal government, Medicare Advantage plans are offered by private insurance companies. These plans must cover everything original Medicare covers, but many offer additional benefits like dental, vision, hearing, and prescription drugs.
Most Medicare Advantage plans also have provider networks, meaning you’ll generally need to see doctors and facilities in the plan’s network except for emergencies. Out-of-network care typically requires prior authorization or comes with higher costs.
In addition to bundled Part A and Part B benefits, many Medicare Advantage plans integrate Part D plan prescription drug coverage. They also frequently have lower out-of-pocket costs through copays and limit your annual expenses with a yearly cap.
The Rising Popularity of Medicare Advantage
When Medicare Advantage plans were first introduced in the 1970s as an alternative to original Medicare, enrollment was relatively low for decades. But over the past 20 years, Medicare Advantage plans have absolutely exploded in popularity.
According to the Centers for Medicare and Medicaid Services (CMS), enrollment in Medicare Advantage plans has increased by over 470% since 2004. In 2022, 29.7 million Medicare beneficiaries were enrolled in a Medicare Advantage plan. This represents 49% of the total Medicare population.
Why this seismic shift from original Medicare to Medicare Advantage? There are several key reasons driving older adults to choose Medicare Advantage plans:
Expanded benefits – Most Medicare Advantage plans provide coverage beyond what original Medicare offers. 92% of Medicare Advantage enrollees are in a plan with prescription drug coverage. Many plans also offer dental, vision, hearing, transportation, meal delivery, gym memberships, and other extra benefits.
Out-of-pocket cost limits – Original Medicare does not limit your annual out-of-pocket spending on Part A and Part B expenses. But Medicare Advantage plans have an annual limit on your costs for medical services. Once you hit this limit, the plan covers 100% of your approved medical expenses.
Lower premiums – On average, Medicare Advantage plan monthly premiums are lower than premiums for Medigap plus Part D prescription drug plans. According to KFF, the average monthly premium for Medicare Advantage plans in 2022 is just $19.
Coordinated care – Medicare Advantage plans typically have provider networks, allowing for greater care coordination and management of chronic conditions. Many plans assign members a primary care doctor.
Innovative models – Medicare Advantage plans have pioneered innovative models like Special Needs Plans tailored for people with certain chronic conditions. Private insurers have also been able to leverage care management techniques and use of health technology data more nimbly than traditional Medicare.
Increased choices – Medicare beneficiaries can choose from dozens of Medicare Advantage plans offered in their area, allowing the ability to select a plan matching their needs, budget and preferences.
Current Medicare Advantage Enrollment Statistics
Now that we’ve covered why Medicare Advantage has become so popular, let’s look at some key statistics for current Medicare Advantage enrollment:
- 29.7 million Medicare beneficiaries are enrolled in Medicare Advantage plans in 2023. This represents 49% of the total Medicare population.
- Medicare Advantage enrollment has increased by over 470% since 2004, when only 5.3 million Medicare beneficiaries were enrolled.
- Over 92% of Medicare Advantage enrollees are in a plan with prescription drug coverage (MA-PD plan).
- 41% of all Medicare beneficiaries are enrolled in a MA-PD plan that combines medical and drug coverage.
- Enrollment is highest in Minnesota, where 73% of Medicare beneficiaries choose Medicare Advantage.
- Puerto Rico has the lowest Medicare Advantage participation rate at just 5 percent.
- 63% of individuals newly eligible for Medicare selected a Medicare Advantage plan during open enrollment in 2022.
These statistics illustrate the overwhelming preference for Medicare Advantage plans among current Medicare beneficiaries. Enrollment rates continue rising year after year, especially among individuals aging into Medicare.
Medicare Advantage Plan Satisfaction
Given the majority of seniors are now enrolled in Medicare Advantage plans, how satisfied are enrollees with their coverage?
Surveys show Medicare Advantage plan members have higher satisfaction rates than those in original Medicare:
- In a 2021 survey by the Commonwealth Fund, 94% of Medicare Advantage enrollees reported being satisfied with their plan. Just 85% of seniors in original Medicare said they were satisfied.
- A J.D. Power survey found 90% of Medicare Advantage enrollees were “highly satisfied” with their plan, compared to 81% satisfaction among seniors in original Medicare.
- Over 93% of Medicare Advantage enrollees say their coverage is “excellent,” “very good,” or “good” according to a 2022 survey by the Kaiser Family Foundation.
The high member satisfaction rates for Medicare Advantage plans likely contribute to seniors continuing to choose these plans each year during open enrollment at growing rates.
Projected Medicare Advantage Enrollment in Coming Years
Looking ahead, Medicare Advantage enrollment is expected to continue growing over the next decade:
- The Congressional Budget Office projects 51% of Medicare beneficiaries will be enrolled in Medicare Advantage plans by 2025.
- By 2030, over 60% of Medicare enrollees could be in a Medicare Advantage plan according to analysis by Mark Farrah Associates.
- In its 2022 trustees report, the Medicare Board of Trustees stated it expects Medicare Advantage enrollment to rise from 26.9 million in 2021 to 36.4 million in 2030.
Barring any major legislative changes, most industry experts forecast Medicare Advantage penetration rates will reach 55-65% in the next 5-10 years. The popularity of Medicare Advantage just continues increasing year after year.
Seniors comparing Medicare options during open enrollment are voting with their feet and selecting Medicare Advantage plans by wide margins. With expanded benefits, network coordination of care, out-of-pocket cost protections, and high satisfaction, this trend shows no signs of stopping. So while 49% of Medicare beneficiaries are currently in Medicare Advantage, expect that number to cross 60% within the next decade.
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What should I consider when choosing a Medicare coverage during Medicare’s open enrollment period?
When choosing a Medicare plan, consider the costs, coverage, and providers that accept Medicare as you compare Medicare Advantage plans to traditional Medicare and Medicare Supplement plans.
What is the difference between Original Medicare and Medicare Advantage health coverage?
Original Medicare is fee-for-service Medicare run by the government, while Medicare Advantage plans are offered by private insurers and bundle Medicare benefits.
Do Medicare Advantage plans cover prescription drugs?
Many Medicare Advantage plans include prescription drug coverage, unlike Original Medicare which requires a separate Medicare Part D plan.
Can I keep my doctor if I switch to a Medicare Advantage plan?
You should check to see if your doctor accepts the Medicare Advantage plan you are considering before switching from Original Medicare.
When can I enroll in a Medicare Advantage health plan?
Medicare beneficiaries can enroll in or change Medicare Advantage plans during Medicare’s annual open enrollment period from October 15 to December 7 each year.
How do I know if I qualify for a Medicare Savings Program?
Low-income seniors may qualify for Medicare Savings Programs that help pay Medicare costs, like premiums and deductibles. Eligibility is based on income and assets.
What extra benefits do Medicare Advantage plans offer?
Many Medicare Advantage plans include dental, vision, hearing, fitness, and transportation benefits not covered by Original Medicare.