In 2018, the average Medicare Advantage (MA) plan is available for Medicare Advantage (MA) plans. By 2024, just six years later, the number has doubled to 43 plans for eight organizations. The substantial increase in the number of plans is not due to the expansion of the breadth of services covered by MA, nor is it due to the diversification of insurers offering MA plans. Instead, this is largely due to the Medicare & Medicaid Services (CMS) rollback in 2019, requiring the same insurer’s MA plans to be “substantially different…on key program characteristics like premiums, cost sharing or benefits.” Eliminating the rule has led to the recent spread of the MA plans and driven the accompanying MA enrollment rate, which increased to 54% of Medicare beneficiaries in 2024.
Part 2: Medicare dominant proliferation
The second part of the Medicare Rights Center’s policy series on Medicare’s sustainability addressed the chaos of the MA program and its consequences for beneficiary coverage and federal spending. Based on independent analysis, Part 2 Summary highlights policy solutions to mitigate the spread of MA programs and better equip Medicare beneficiaries to navigate the overloaded MA market.
Select Overload
Since the “meaningful difference” requirement is no longer met, many insurers’ plans flood the market, which only differ slightly in the cost distribution of supplemental benefits or certain services. The network directory for such plans may be larger, but the Medicare plan finder does not allow users to be filtered by providers, or even display provider directories with consumers who compare plans. This puts a burden on Medicare beneficiaries to consult each program’s catalogue individually or contact their providers for the details they need to make an informed admission decision.
This overload of choices (even making plans offered by plans difficult and time-consuming, may also be part of a MA organization’s strategy to retain consumer. More plans, especially when including “affinity plans” for certain groups of people, make it harder to make informed choices and more daunting conversion plans, not to mention insurance companies. Overwhelming people also often drive people with Medicare to seek help from brokers or agents who may financially motivate them to promote their plans at a particular insurer.
More plans make making informed choices and more daunting conversion plans more difficult, not to mention insurance companies.
Using this and other strategies such as favorable choices, denials and upgrades, MA has achieved incredibly high profit margins by overpaying. In 2023, the gross margin of the MA program exceeded twice that of the Medicaid Hosting Plan and Group Market Plan. As the MA program improves its profit margins, beneficiaries are harmed: MA is promised for supplemental benefits and strives to sign up for insufficient information, and they may find themselves stuck in an invalid program that is invalid for them, unable to afford or navigate to convert to another program or original Medicare. And it is not possible to afford or navigate to switch to another plan or original health insurance.
Need policy reforms
The spread of MA can be addressed through policies that directly regulate MA plans, mitigate payments and other financial incentives for other brokers, and strengthen consulting and educational resources for Medicare beneficiaries. Most directly, CMs can restore “meaningful difference” requirements and standardize programs (as they did for Medigap and certain affordable care bill market plans) to reduce confusion and increase equity. Ending the vulnerability, allowing withdrawals and overpayments, and the vulnerability that regulates broker payments, can reduce some economic incentives to incentivize MA organizations to do their best to retain consumers.
Accessing more information will allow Medicare beneficiaries to understand the program products and choose the one that best suits their needs.
People with Medicare need to obtain better information and resources from CMS that directly address their primary decision-making considerations. Federal resources for Medicare beneficiaries, such as Medicare plan discoverers and state Health Insurance Assistance Program (Ship) counselors, need to be better promoted and funded. While a valuable source of information, the Medicare program finder lacks critical search features such as the ability to search by providers, and the expert admission consultation provided by ship counselors is limited by insufficient federal funding. Policies that emphasize more access to information will enable Medicare beneficiaries to understand the program products and choose the one that best suits their needs.
For more information on this topic, explore Medicare Advantage Buliferation Part 2 of the Medicare Sustainability Policy Series, now available at www.medicarerights.org/policy-series/medicare-sustainability.
Explore the infographic
Medicare – Sustainability – MA Proliferation Chart
