Medicare Advantage Enrollment Is Up But Growth Is Slowing

The Medicare Advantage market is still going strong with more than half of seniors who are eligible for traditional Medicare, opting instead for this alternative, according to a recent report. 

Some 1.7 million people since last year signed up for one of the 5,349 plans offered nationwide under Medicare Advantage, also known as Medicare Part C, according to a report by healthcare advisory firm Chartis.

That brings the total number of Advantage beneficiaries to 33 million — out of a total of 65.9 million Medicare-eligible seniors. At the same time, the total number of people enrolled in traditional Medicare fell by 515,000, according to the report, which was based on data from the Centers for Medicare and Medicaid Services (CMS) and surveys of 19 health plan providers.

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In addition, the report found that Advantage accounts for at least 50% of Medicare enrollment in 26 states.

Inflection point

But the Advantage marketplace is at an inflection point, Chartis said in the report. While growth in enrollments has been unprecedented in recent years, it slowed this year and may slow further.

Growth has been driven by an aging population as well as continued consumer attraction to the plans when compared to original Medicare, Chartis said. This trend will likely continue, but regulatory scrutiny and other headwinds are expected to cloud the forecast beginning in the 2025 plan year.

Last December, for example, a bipartisan group of U.S. senators called out CMS for shortfalls in the agency's data collection and reporting practices for Advantage plans. The group is urging CMS to force plan providers to improve transparency by reporting how much they are actually paying for patient services and how much patients are paying.

In a 2023 report to Congress, the Medicare Payment Advisory Commission (medPAC) — which advises Congress on Medicare issues — said it could not conclude for certain that Advantage provides better care than traditional Medicare. 

Advantage plans "are now facing challenging market, competitive and regulatory forces,” Alexis Levy, managing director of HealthScape Advisors and co-author of the Chartis report, said in a statement.

“This new market landscape requires stakeholders to diversify offerings, optimize member engagement, and create sustainable growth and performance," Levy said, adding that health plan providers have made major investments in the market. 

Major retailers have as well, as Kiplinger has previously reported. Drugstore chains including Walgreens and supermarkets such as Kroger are partnering with healthcare tech firms and providers to offer new Advantage plans or expand their existing offerings.

Market trends

According to Chartis, other trends include the increased dominance of for-profit carriers including Aetna, Humana and United in the market. Combined, for-profit carriers accounted for a whopping 73.5% of all Advantage enrollment and 86% of the total market's growth. 

Nonprofit and Blue-branded plan providers, meanwhile, accounted for little overall enrollment. Some 84% of the insurers that Chartis surveyed said they believed memberships would continue going up next year, despite the slowing in overall market growth.

Another trend is the rise in Special Needs Plan (SNP) enrollment. Nearly seven in 10 new Advantage enrollees opt for SNPs, and the top-five plans now represent 77% of the SNP market, Chartis said.

In addition, growth in the number of plan options is roughly flat from the previous year, with the average senior having access to 44 plans. This, Chartis said, compares with a trend in the last five years of 80% growth.

In response to calls for more transparency in the Advantage program and to strengthen the program's data capabilities, the CMS earlier this year began asking for your help. The agency issued a request for more information (RFI) for the public to give data-related input on all aspects of the Advantage program.

To participate, you can access the RFI on the Federal Register's webpage. The deadline for response is May 29.

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