The increased spending was largely attributed to skilled nursing facilities, outpatient, and inpatient hospital care. The study raises questions about why individuals disenroll, the affordability of traditional Medicare without supplemental insurance, and the adequacy of the current Medicare payment system
More than half (54%) of eligible Medicare beneficiaries are enrolled in a private Medicare Advantage plan in 2024. People are drawn to Medicare Advantage because most plans offer extra benefits and lower cost sharing compared to traditional Medicare without supplemental insurance, usually for no additional premium (other than the Part B premium). Medicare Advantage is also popular among lawmakers in Congress, both Republicans and Democrats, as well as President-elect Trump, whose previous administration generally supported policies that provided increased flexibilities to insurers when designing and administering these private plans.
Though Medicare Advantage is a popular choice for Medicare beneficiaries, there is some evidence that people who use relatively more health care services are less likely to choose a private plan and more likely to choose traditional Medicare. Previous analyses from KFF and the Medicare Payment Advisory Commission (MedPAC) found that people who enroll in Medicare Advantage have lower Medicare spending in the years before they enroll than similar people who remain in traditional Medicare, even after controlling for health status. This pattern may be partly attributable to concerns about the tools Medicare Advantage plans typically use to manage utilization and costs, such as prior authorization requirements and provider network restrictions.
Biniek, J. F., Cottrill, A., Sroczynski, N., & Neuman, T. (2024, December 6). Medicare Spending was 27% More for People who Disenrolled from Medicare Advantage than for Similar People in Traditional Medicare | KFF. KFF. https://www.kff.org/medicare/issue-brief/medicare-spending-was-27-percent-more-for-people-who-disenrolled-from-medicare-advantage-than-for-similar-people-in-traditional-medicare/
Berklan, J. M. (2024, December 9). Medicare spending jumps 27 percent when patients leave Medicare Advantage plans – McKnight’s Long-Term Care News. McKnight’s Long-Term Care News. https://www.mcknights.com/news/medicare-spending-jumps-27-percent-when-patients-leave-medicare-advantage-plans/
Weaver, C. (2024, December 6). Medicare patients who leave private insurers for government coverage are costlier than most, study finds. WSJ. https://www.wsj.com/health/healthcare/patients-who-leave-private-medicare-insurers-for-government-coverage-are-costlier-than-most-study-finds-1ecf0200
Improve Medicare Advantage reimbursements with payer contract management that puts payer rules in the hands of clinicians & billers.
