Medicare Advantage (MA) has become increasingly popular over the past decade, with significant movement of beneficiaries away from traditional fee-for-service Medicare. While fee-for-service is still the option chosen by most beneficiaries (55 percent), some subsets of beneficiaries are much more likely to be enrolled in MA—specifically beneficiaries who are either a racial minority or dually eligible for Medicare and Medicaid benefits.
As of January 2022, 61 percent of these minority, dual eligibles are in an MA plan, while 51 percent of minority, non-dual eligibles and 51 percent of non-minority, dual eligibles also are enrolled in an MA plan (see exhibit 1). Only non-minority, non-dual-eligible enrollees are still more likely to choose Medicare fee-for-service with 41 percent enrolled in MA.
In recent years, leaders at the Centers for Medicare and Medicaid Services (CMS) have made clear their focus on improving health equity in the overall Medicare program. Key groups experiencing health inequities are those Medicare beneficiaries who are either racial minorities or low income. Traditionally, the majority of these Medicare beneficiaries have chosen to remain in the traditional fee-for-service Medicare. However, there has been a shift of this population into the MA program. Here, we examine this movement, posit potential reasons and implication for this population’s adoption of MA plans, and suggest further areas of research.
Exhibit 1: Percent of Medicare Advantage beneficiaries by minority and dual eligibility, 2010 to 2022
Source: Authors’ analysis of Medicare enrollment data.
Approach
We used the 100 percent Master Beneficiary Summary File from 2010 to 2022. These data track the demographic, geographic, and enrollment information for all Medicare beneficiaries for every month of the year. Beneficiaries were categorized as being enrolled in fee-for-service Medicare or MA using the enrollment information in January of each year (2010–22). Furthermore, a beneficiary was categorized based on their dual eligibility for Medicaid in January and whether they are a racial minority (that is, were not White). Thus, each beneficiary fit into one of four possible categories (see exhibit 2). Enrollment in MA and fee-for-service was then aggregated nationally to assess the total volumes longitudinally on an annual basis.
Exhibit 2: Medicare beneficiary categories
Source: Authors’ analysis of Medicare enrollment data.
Enrollment Trends And Patterns
Total enrollment in Medicare has grown proportionally with the aging US population, increasing from 46 million in 2010 to 63 million in 2022 (see exhibit 3). However, the percentage of beneficiaries electing to stay enrolled in the traditional fee-for-service environment has rapidly declined (76 percent in 2010 to 55 percent in 2022), whereas the percentage of beneficiaries opting to enroll in an MA plan has increased from 24 percent in 2010 to 45 percent in 2022. This represents an increase in the number of beneficiaries enrolled in an MA plan from 11 million in 2010 to 29 million in 2022, a percentage increase of 162 percent. During this same time, the number of fee-for-service beneficiaries has dropped 2 percent, from 35.1 million to 34.5 million.
Exhibit 3: Total Medicare enrollment, by fee-for-service and MA, 2010–22
Source: Authors’ analysis of Medicare enrollment data. Notes: FFS is fee-for-service. MA is Medicare Advantage.
The adoption of MA by beneficiaries was high across each of the four categories of beneficiaries but particularly so for those who are a minority dual eligibles (see exhibit 4). The number of minority-dual eligible beneficiaries enrolled in MA increased from 746,000 in 2010 to 3.6 million in 2022, a 386 percent increase. This contrasts with the minority-dual eligible beneficiaries enrolled in fee-for-service, which decreased from 2.9 million in 2010 to 2.3 million in 2022, a 19 percent reduction.
Exhibit 4: Total MA enrollment by minority race and dual eligibility, 2010 to 2022
Source: Authors’ analysis of Medicare enrollment data.
This trend of movement into MA by dual-eligible and minority beneficiaries is even more evident when looking at the percentages of enrollment within MA (see exhibit 5).
Exhibit 5: Percent MA enrollment by minority race and dual eligibility, 2010 to 2022
Source: Authors’ analysis of Medicare enrollment data.
In 2010, just 6.8 percent of all beneficiaries enrolled in an MA plan were minority dual eligibles, compared to 12.6 percent of all beneficiaries in 2022—an 85 percent increase. This contrasts with the total Medicare population, in which minority-dual eligible beneficiaries made up 7.9 percent of all beneficiaries in 2010, increasing only 19.0 percent to 9.4 percent of beneficiaries in 2022. In 2022, for every minority-dual eligible beneficiary enrolled in fee-for-service, there are 1.56 minority-dual eligible beneficiaries enrolled in MA.
Why Is This Happening?
While we are able to observe the trend of minority and low-income Medicare beneficiaries increasingly moving to MA plans, the reasons for it are not clear. We do, however, have some hypotheses on what may be driving this trend and suggest three potentially contributing areas: price sensitivity, plan recruitment, and availability of specialty plans. Additional work is needed to measure the magnitude of impact that any of these factors may play.
MA plans often have lower prescription drug premiums than traditional Medicare. Most MA beneficiaries pay nothing beyond their Part B premiums, and MA plans often offer additional benefits such as dental and vision coverage and have out-of-pocket maximums. This does come at a price, though, as Medicare pays more to MA plans per patient than they would have under traditional Medicare and the rate of cost growth is faster in MA. Cost-conscious beneficiaries, such as those that are dually eligible for Medicaid, may choose an option based solely on monthly expenses, potentially without fully realizing attendant disadvantages such as possibly narrower networks.
A second potential reason minority and low-income beneficiaries might opt for MA over fee-for-service is that MA plans have made an explicit decision to recruit these patients. MA has been viewed as a major growth opportunity for many insurers and growth has been coupled with extensive marketing, outreach, and recruitment of members. There may be more enhanced marketing in areas where minority and dually eligible populations live, or it is possible that some in these groups are more likely to respond to marketing than other populations.
The expansion of specialty MA plans, such as the D-SNP (dual-eligible special needs plans), that cater to subpopulations is another potential reason that low-income beneficiaries are joining MA at a higher rate than other beneficiaries as they are specifically designed to cater to the needs of dual eligibles and may include benefits such as transportation or enhanced care management. The existence of these plans may explain some of the growth of MA for these populations, and the expectation is that outcomes within these models would be better than in traditional Medicare.
MA And Health Equity
CMS has recently announced a major 10-year strategic refresh that includes improving health equity, including addressing the needs of minority and low-income populations. While much activity around health equity has been focused within traditional Medicare, the growth of enrollment in MA for these populations MA suggests that CMS should review MA’s role in promoting equity, particularly as there has been evidence of disparities in MA. The implication of this is that to adequately measure and improve care for vulnerable populations, CMS will need to work more directly with private insurance companies to achieve their equity goals. With 51 percent of all dual eligibles enrolled in MA plans, CMS is likely to consider requiring additional data collection, quality evaluation, and review from these plans. Quality measures around equity as well as penalties for plans may ultimately also be required, increasing administrative complexity. CMS’s proposed creation of a health equity index for MA star ratings is a good first step.
Looking Forward
The strong trend of low-income and minority racial and ethnic populations moving to MA has shown no signs of slowing, and we expect it to continue in coming years. With this trend, there are important questions that still need to be addressed and better understood. More work is needed to understand why it is happening and assess the impact of this enrollment trend. Are minority dually eligible beneficiaries getting a level of care that is equivalent or better than they would receive under traditional Medicare? Are these populations particularly susceptible to marketing or being unfairly targeted by MA plans for recruitment? What is the impact of quality scores for plans with a high percentage of dual eligibles? How much does plan design differ between MA plans that have high concentrations of minority dually eligible beneficiaries compared to plans that primarily enroll non-minority, non-dual eligible populations? While the trend is clear, the implications are not, and future study and understanding are warranted to help drive future policy changes within CMS.
Authors’ Note
David Muhlestein is an employee of Health Management Associates, which does work related to Medicare Advantage and traditional Medicare. Nathan Smith is an employee of Care Journey, which does work related to Medicare.
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