Greater than half (54%) of eligible Medicare beneficiaries are enrolled in a personal Medicare Benefit plan in 2024. Individuals are drawn to Medicare Benefit as a result of most plans supply further advantages and decrease value sharing in comparison with conventional Medicare with out supplemental insurance coverage, often for no further premium (apart from the Half B premium). Medicare Benefit can be widespread amongst lawmakers in Congress, each Republicans and Democrats, in addition to President-elect Trump, whose earlier administration typically supported insurance policies that offered elevated flexibilities to insurers when designing and administering these non-public plans.
Although Medicare Benefit is a well-liked selection for Medicare beneficiaries, there may be some proof that individuals who use comparatively extra well being care companies are much less doubtless to decide on a personal plan and extra doubtless to decide on conventional Medicare. Earlier analyses from KFF and the Medicare Fee Advisory Fee (MedPAC) discovered that individuals who enroll in Medicare Benefit have decrease Medicare spending within the years earlier than they enroll than comparable individuals who stay in conventional Medicare, even after controlling for well being standing. This sample could also be partly attributable to considerations concerning the instruments Medicare Benefit plans sometimes use to handle utilization and prices, similar to prior authorization necessities and supplier community restrictions.
This evaluation seems to be at conventional Medicare spending amongst individuals who select to disenroll from Medicare Benefit and acquire protection below conventional Medicare throughout the annual Medicare open enrollment interval. It compares their conventional Medicare spending (Elements A and B) within the yr following disenrollment to comparable individuals who had been constantly lined by conventional Medicare (see Appendix for traits of every group), utilizing information from the Medicare Beneficiary Abstract File (MBSF) for 2021 and 2022 (see Strategies).
Key Takeaways
Medicare spent 27% extra, on common, for individuals who had been lined by conventional Medicare after disenrolling from Medicare Benefit than for individuals who had been constantly lined by conventional Medicare, after adjusting for variations in well being standing and different traits. It is a distinction of $2,585 in Medicare spending per individual, on common, between the 2 teams in 2022.
Variations in Medicare spending between individuals who disenrolled from Medicare Benefit and beneficiaries constantly in conventional Medicare various by well being situation, starting from 15% for individuals with pneumonia to 34% for individuals with diabetes. For instance, amongst individuals with sure cancers, Medicare spending was 28% ($4,907) greater, on common, amongst those that disenrolled from Medicare Benefit than amongst individuals constantly lined by conventional Medicare.
Variations in Medicare spending between individuals who disenrolled from Medicare Benefit and people constantly in conventional Medicare elevated with age for Medicare beneficiaries ages 65 and over. For instance, amongst individuals ages 85 and over the distinction was 46% ($7,113) in comparison with 25% amongst individuals ages 65 to 69 ($1,843).
Variations in Medicare spending between individuals who disenrolled from Medicare Benefit and beneficiaries constantly in conventional Medicare had been bigger amongst Black (55%, $5,203) and Hispanic (54%, $4,434) beneficiaries than White beneficiaries (25%, $2,464).
Individuals dually-eligible for Medicare and full Medicaid advantages who disenrolled from Medicare Benefit had spending that was 61% ($9,435) greater than their counterparts who had been constantly in conventional Medicare, whereas the distinction in spending for Medicare beneficiaries who don’t obtain Medicaid was 20% ($1,684).
Expert nursing facility spending accounted for the biggest share of the distinction in common Medicare spending per individual between individuals who disenrolled from Medicare Benefit and people constantly in conventional Medicare (34%), adopted by outpatient hospital spending (23%), and inpatient hospital spending (20%), with some variation by persistent situations and different beneficiary traits.
The considerably greater Medicare spending amongst individuals who disenrolled from Medicare Benefit, on common, in comparison with comparable individuals who had been constantly lined by conventional Medicare raises a number of questions. First, why are some Medicare Benefit enrollees selecting to disenroll from Medicare Benefit quite than get the medical care they want from their plan, and why are they receiving extra medical care within the yr following disenrollment than comparable individuals who have been constantly lined by conventional Medicare?
Second, given how difficult it may be for individuals with pre-existing situations to buy Medicare supplemental insurance coverage (Medigap) in the event that they change to conventional Medicare, and considerations about probably excessive out-of-pocket prices below conventional Medicare with out supplemental protection, what share of Medicare Benefit enrollees would need to change to conventional Medicare, however really feel they can not afford to take action?
Third, does the present cost system adequately account for antagonistic choice into conventional Medicare, which results in greater Medicare Benefit benchmarks and better funds to Medicare Benefit plans? Moreover, to what extent does the sample of upper utilization and spending amongst individuals who disenroll from Medicare Benefit, scale back the prices incurred by insurers, rising their income and contributing to their means to supply supplemental advantages? Lastly, how does greater Medicare spending amongst individuals who disenroll from Medicare Benefit affect Medicare spending, and to what extent does it place added pressure on the Medicare Hospital Insurance coverage Belief Fund and improve beneficiary premiums?
Individuals who disenrolled from Medicare Benefit had Medicare spending that was 27% extra, on common, than spending for comparable individuals constantly lined by conventional Medicare
Total, individuals who disenrolled from Medicare Benefit had Medicare spending that was 27% ($2,585) greater, on common, than these constantly lined by conventional Medicare, after adjusting for variations in well being threat elements (Determine 1).
A number of research have discovered that sure teams of Medicare Benefit enrollees change to conventional Medicare at greater charges, together with beneficiaries of their final yr of life, these with greater well being wants, and people dually eligible for Medicare and Medicaid. Moreover, some teams with excessive disenrollment charges, similar to beneficiaries of their final yr of life, have greater well being care spending after they disenroll in comparison with comparable beneficiaries who’re long-time recipients of conventional Medicare.
This evaluation exhibits that spending variations should not restricted to these notably high-need teams as a result of the spending variations persist after controlling for well being threat, although the magnitude of the distinction is larger, on common, for high-cost beneficiaries. Whereas prior analysis finds decrease well being care spending amongst individuals who enroll in Medicare Benefit, within the yr previous to enrollment, this evaluation exhibits that individuals who disenroll from Medicare Benefit use extra companies and incur greater Medicare prices within the yr following disenrollment than comparable beneficiaries who had been constantly lined below conventional Medicare.
Individuals who disenrolled from Medicare Benefit had greater spending, on common, than these constantly lined by conventional Medicare throughout all persistent well being situations examined
Individuals who disenrolled from Medicare Benefit had greater Medicare spending, on common, throughout all persistent well being situations examined, after adjusting for different well being threat elements, than these constantly lined by conventional Medicare (Determine 2, Appendix Desk 2). Variations in common per individual spending various by situation, starting from 15% ($5,187) for individuals with pneumonia to 34% ($4,586) for individuals with diabetes. The most important distinction in Medicare spending per individual in greenback phrases between individuals who disenrolled from Medicare Benefit and people constantly in conventional Medicare was amongst individuals with Alzheimer’s illness or different dementias ($7,451), adopted by stroke ($6,660), and atrial fibrillation ($6,147). Amongst individuals with sure cancers, together with breast, colorectal, endometrial, lung, prostate, and urologic cancers, spending for individuals who disenrolled from Medicare Benefit was 28% ($4,907) greater than for individuals constantly lined by conventional Medicare.
Individuals with larger well being wants may even see a number of well being care suppliers and require quite a few specialty companies, leading to a larger burden from the restricted supplier networks, prior authorization, and referral necessities Medicare Benefit plans usually make use of. Prior authorization is most frequently required for high-cost companies, similar to chemotherapy and different Half B medication, inpatient hospital stays, and stays in expert nursing services. As well as, slim supplier networks could restrict accessible choices for therapy of sure situations. For example, prior research have discovered that Medicare Benefit enrollees are much less doubtless than conventional Medicare beneficiaries to obtain care from the very best rated hospitals for therapy of most cancers or cancer-related surgical procedures.
Common variations in Medicare spending between individuals who disenrolled from Medicare Benefit and people constantly lined by conventional Medicare elevated with age amongst beneficiaries ages 65 and older
Throughout all age teams, individuals who disenrolled kind Medicare Benefit had greater Medicare spending, on common, than these constantly lined by conventional Medicare. Common variations in per individual spending elevated with age amongst older beneficiaries, from 25% ($1,843) amongst these ages 65-69 to 46% ($7,113) amongst these ages 85 and older. Individuals below the age of 65, who qualify for Medicare on account of long-term incapacity, have considerably greater common spending per individual than Medicare beneficiaries between the ages of 65 and 74, and the variations in spending amongst this group between those that disenrolled from Medicare Benefit and people constantly lined by conventional Medicare had been additionally considerably bigger (39%, $3,348) (Determine 3).
Common variations in Medicare spending between individuals who disenrolled from Medicare Benefit and people constantly lined by conventional Medicare had been greater amongst Black and Hispanic than White beneficiaries
Throughout all racial and ethnic teams examined, individuals who disenrolled from Medicare Benefit had greater Medicare spending, on common, than these constantly lined by conventional Medicare. Common variations in per individual spending had been roughly two instances greater amongst Black (55%, $5,203) and Hispanic (54%, $4,434) beneficiaries than amongst White beneficiaries (25%, $2,464) (Determine 4).
Common variations in Medicare spending between individuals who disenrolled from Medicare Benefit and people constantly lined by conventional Medicare had been greater amongst individuals dually eligible for Medicare and full Medicaid advantages
Amongst dual-eligible beneficiaries who certified for full Medicaid advantages, those that disenrolled from Medicare Benefit had spending that was 61% ($9,435) greater, on common, than these constantly lined by conventional Medicare. Common variations in per individual spending had been smaller amongst beneficiaries who weren’t dual-eligible (20%, $1,684) and amongst dual-eligible beneficiaries who certified for help with Medicare premiums, and in some instances value sharing, however not full Medicaid advantages (partial-benefit dual-eligible beneficiaries) (49%, $4,114) (Determine 5).
Expert nursing facility and hospital care accounted for greater than three-quarters of the common distinction in Medicare spending between individuals who disenrolled from Medicare Benefit and people constantly lined by conventional Medicare
Expert nursing facility companies accounted for the biggest share (34%, $877) of the common distinction in per individual spending between individuals who disenrolled from Medicare Benefit and people constantly lined by conventional Medicare, adopted by outpatient hospital companies (23%, $596) and inpatient hospital companies (20%, $505) (Determine 6).
For sure teams, the overall distinction in common per individual spending between individuals who disenrolled from Medicare Benefit and people constantly lined by Medicare Benefit was largely pushed by expert nursing facility companies. These included dual-eligible beneficiaries with full Medicaid advantages (62%), beneficiaries ages 80 to 84 (59%) and ages 85 and older (55%), and beneficiaries with pneumonia (85%), Alzheimer’s illness or different dementias (74%), stroke (74%), and coronary heart failure (73%) (Appendix Desk 3). Against this, expert nursing facility companies made up a smaller share of the overall distinction in common spending amongst individuals below age 65 (20%) and people ages 65 to 69 (14%).
Amongst different teams, inpatient hospital companies made up a bigger share of the distinction in common spending, together with amongst beneficiaries below age 65 with long-term disabilities (48%), in addition to amongst beneficiaries with bronchial asthma (47%), glaucoma (33%), and persistent obstructive pulmonary illness (33%). Beneficiaries with sure cancers had among the many highest share of the overall distinction in common spending attributed to outpatient hospital companies (34%), an analogous share attributed to expert nursing facility companies (30%) and a comparatively modest share of the distinction attributed to spending on inpatient hospital companies (18%).
Per this evaluation, a current report by the bulk workers of the Senate Everlasting Subcommittee on Investigations discovered that Medicare Benefit plans usually tend to deny prior authorization requests for protection of post-acute care, similar to expert nursing facility stays, than for different forms of companies.
This work was supported partially by Arnold Ventures. KFF maintains full editorial management over all of its coverage evaluation, polling, and journalism actions.
