Changing Medicare

Traditional Medicare still rules the roost, and the current administration wants to keep it that way. But more and more beneficiaries prefer the Medicare Advantage alternative. When they have a choice older Americans prefer these more structured plans, often with greater benefits, than the more chaotic traditional Medicare. Read more here.

Today, 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan, more than at any time in history. In some states, like Hawaii and Minnesota, about half of Medicare beneficiaries are in such plans. This is despite the fact that government payments to plans were cut by the Affordable Care Act. They’re down eight percentage points from their peak in 2009, as measured relative to the cost of traditional Medicare coverage. Still, taxpayers pay more to cover a beneficiary in Medicare Advantage than in traditional Medicare.

The surge in Medicare Advantage enrollment seems surprising. With payments to plans cut by the Obama administration, history suggests enrollment should go down, not up. What, then, could explain the growing popularity of private Medicare plans?