Switching Rates from Traditional Medicare to Medicare Advantage on the Rise

Most of the new Medicare Advantage enrollment growth can be attributed to members switching over from Medicare.

A higher share of beneficiaries switched from traditional Medicare to Medicare Advantage (MA) than vice versa in 2020, contributing to recent MA growth, according to research published in JAMA Health Forum.

MA share of overall Medicare enrollment skyrocketed from 19% in 2007 to 46% in 2021, the study notes, and is expected to surpass the 50% threshold by 2023. Key to that larger share is enrollees in traditional Medicare migrating to MA.

The study, which used the 2014 to 2020 CMS Master Beneficiary Summary File Limited Data Sets, found that switching rates from MA to traditional Medicare exceeded those from traditional Medicare to MA from 2017 through 2020.

In 2020, traditional Medicare to MA switching rates were nearly four times higher than MA to traditional Medicare for Medicare only and 2.5 times higher than MA to traditional Medicare for Medicare-Medicaid enrollees.

Switching accounted for new MA enrollment growth, increasing from 49% in 2016 to 67% in 2020.

Researchers also found switching rates differed by population group. Rates generally declined with age, while mortality status played a factor as well. Beneficiaries in the last year of their life were more than twice as likely to disenroll from MA than from traditional Medicare in 2016 (5.4% vs 2.6%). By 2020, that flipped the other way to the tune of 3.1% vs 5.1%.

The study discovered that Black and Hispanic beneficiaries generally switched at greater rates than White enrollees. By 2020, Black and Hispanic beneficiaries were more than twice as likely to disenroll from traditional Medicare as White enrollees (13.4% and 13.5%, respectively, vs 5.9%).

"Switching may be associated with changes in health status, inclusion of additional services in MA, cost considerations, and access to specialized health care 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."

More benefits and out-of-pocket cost limits are at the top of the list for reasons why enrollees are selecting MA plans, a survey by the Commonwealth Fund found.

The survey fielded responses from older adults aged 65 and above who were enrolled in Medicare to better understand why they opt for MA or Medicare.