Medicare Advantage Enrollment Grows by 10 Percent

Kaiser Family Foundation just released a Data Spotlight on 2012 Medicare Advantage Enrollment. The report shows that 2012 MA enrollment increased 10 percent from 2011 levels with the addition of 1 million new enrollees. The report also noted that MA enrollment has doubled since 2005. Given the payment cuts in the Medicare Modernization Act and Affordable Care Act, this market penetration is surprising. And MA is poised for even more growth in the next several years with the shift of retirees from employer drug coverage due to the loss of the Retiree Drug Subsidy tax benefits, state initiatives that are shifting dual eligibles into managed care, and the arrival of the baby boomers who are familiar with PPO products. It not unrealistic to imagine that MA plans could cover one-third of all Medicare beneficiaries. Some of the 2012 growth is probably due to the fact that premiums in all plans except Regional PPOs decined in 2012. This trend cannot continues since the ACA payment cuts are still being phased in and the quality demonstration providing higher bonuses will end after 2014. Plans are expected to increase premiums and reduce benefits beginning next year. As long as MA remains a better value than Medigap, we should expect to see enrollment continue to increase.