4 in 10 Medicare beneficiaries expected to be on Medicare Advantage plans by 2028

When the Medicare Advantage program was created, just 3% of the Medicare population participated. But both Republicans and Democrats have made policy decisions that increased enrollment significantly. (Eli Richman/FierceHealthcare)

Medicare Advantage enrollment and spending are expected to surge over the next decade, until more than 4 in 10 beneficiaries are in the program by 2028.

The MA enrollment rate is set to grow from 34% in 2018 to 42% over the next 10 years. As the share of the population on MA grows, public perception of Medicare could shift significantly, according to the New England Journal of Medicine (NEJM). 

"The Medicare of tomorrow could look much different than it does today—more like a marketplace of private plans, with a backup public plan, and less like a national insurance program. This may or may not be the program that people envision when they talk about Medicare for All," NEJM authors wrote in a recent report.

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Beneficiaries have grown fond of MA plans due to their strong financial protections and the extra benefits they provide, like dental care and gym memberships. Yet those extra benefits are also set to take a toll on taxpayers.

Spending on MA beneficiaries is expected to almost triple, from $206 billion in 2018 to $584 billion in 2028, according to projections from the Congressional Budget Office (PDF). NEJM suggested that this public spending could become a more political issue as spending spikes, even though the plans are popular. 

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"Policymakers could face tough choices in the future as they seek to balance competing demands to reduce the growth in Medicare spending and also provide plan choice and extra benefits," the authors wrote. "To achieve savings, they could, for example, reduce plan bonus payments and rebates. … Striking the right balance in payment policy from the perspective of beneficiaries, insurers, and the federal government is likely to remain a considerable challenge."

Insurers like UnitedHealthcare, Aetna and Anthem have reported huge windfalls from the government program that is administered by private plans. And new regulatory flexibilities have CEOs bullish about the future. The program is also attracting new startups like Oscar Health and Devoted Health.

Over the past decade, the program has grown from 21% of Medicare beneficiaries to 34%. But inequity issues are also likely to become more acute as MA enrollment grows, as not everyone has the same access to the same plans. Among other things, MA tends to have a smaller footprint in rural areas, according to NEJM, so beneficiaries in those areas are also more likely to be on traditional Medicare.

These disparities can be problematic not just because of the extra benefits MA plans provide but also because of their financial protections. Unlike traditional Medicare, MA plans are required by CMS to have an out-of-pocket limit; in 2018, the average enrollee had an annual limit of $5,215. This can make a huge difference to seniors, many of whom live on fixed incomes with high healthcare costs.

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"More than one-third of all beneficiaries in traditional Medicare spent at least 20% of their per capita income on out-of-pocket health-related costs in 2013," NEJM wrote. "In addition, Medicare Advantage plans offer the convenience of one-stop shopping by covering all Medicare benefits; in contrast, most beneficiaries in traditional Medicare have wraparound supplemental coverage."

As a result of these changing expectations, future policymakers may either have to alter access to MA plans or change the benefits incorporated in traditional Medicare, NEJM suggested.