Advising the Congress on Medicare issues

September 2014

Do new Medicare beneficiaries choose Medicare Advantage right away?

by MedPAC Staff | Sep 15, 2014



If you missed the Commission meeting last week, you might have missed this piece of analysis.

In 2012, about 28% of all Medicare beneficiaries (who have Part A and Part B) were enrolled in private Medicare Advantage (MA) plans. Recently, there has been a widely reported claim in the policy community that half of all new Medicare beneficiaries are now joining MA. The story sort of works like this: in 2012, the total number of beneficiaries in Medicare grew by two million, while the number of beneficiaries in MA grew by 1 million. These facts are true, but despite how it might sound, this does not mean that half of all new beneficiaries chose MA. 

So what share of beneficiaries do sign up for MA right as they become eligible for Medicare?

In our analysis, we looked at beneficiaries new to Medicare. In 2012, 600,000 new Medicare beneficiaries were enrolled in MA in August 2012, out of a total of 2.5 million new Medicare beneficiaries, resulting in a participation rate of 24%, not 50% as has been claimed. The rest of the new MA enrollees in 2012 were beneficiaries who switched into private plans after previously being in Traditional Medicare (Fee For Service).

Next, we followed some beneficiaries for a few years to see when they did enroll. The last line of the table above traces the MA enrollment for the cohort of beneficiaries who were newly eligible for Medicare in 2009. At the end of 2009, 21 percent were in a plan. By the end of 2012, 29 percent were in plans. So while the beneficiaries new to Medicare in 2009 participated in MA in below average rates in 2009, enough of them joined plans later, so that their participation rate was above average by 2011. 

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