Medicare Advantage Enrollment Doubles

Enrollment in the Medicare Advantage plans that private insurers offer as an alternative to traditional Medicare coverage has more than doubled over the past decade, the Kaiser Foundation reports.

The share of the Medicare population enrolled in these private plans is 30 percent, up from 13 percent in 2005, the non-profit foundation said.

The reason for this dramatic growth: Medicare Advantage became a better deal for older Americans in the wake of a 2003 increase in federal subsidies to insurance companies offering the plans.

The federal government subsidizes insurers through its reimbursements for the care they cover for older Americans enrolled in Medicare Advantage. Those payments were increased in 2003. Insurers responded by reducing beneficiaries’ copayments and cost-sharing in the plans and by providing medical services not always available to people who enroll directly in Medicare and purchase Medigap policies, said Gretchen Jacobson, an associate director of Kaiser’s Medicare policy program.

The extra services include gym memberships, eye glasses, dental care, and preventive medical care. To rein in their overall medical costs, Medicare Advantage plans restrict the hospitals and doctors that patients can use.

Another factor fueling rising enrollment is that more insurers moved into rural markets to sell their Medicare Advantage plans after the 2003 funding changes, Jacobson said.

By 2009, increases in federal funding to Medicare Advantage plans had pushed to 14 percent the premium in per-beneficiary funding these plans received in excess of funding for beneficiaries directly enrolled in traditional Medicare. The Affordable Care Act cut that premium back to 6 percent in 2014, and it is projected to fall to 1 percent by 2017.

Nevertheless, the Congressional Budget Office anticipates that Medicare Advantage enrollment will continue to rise, albeit more slowly than in recent years.