Boutique to Booming: Medicare Managed Care and the Private Path to Policy Change

In 2014, Medicare Advantage (MA) enrollment surpassed 30 percent of eligible beneficiaries. Twenty-five years earlier, enrollment hovered at just 3 percent. The expansion of private Medicare plans presents a puzzling instance of policy change within Medicare-a program long held to be a quintessential case of policy stasis. This article investigates the policy features that made Medicare susceptible to this dramatic policy shift, as well as the processes by which the initial policy change remade the politics of Medicare and solidified the MA program. The first enrollment surge occurred in the absence of a proximate legislative or administrative change. Instead, increased spending and expanded benefits were the result of the interaction of new market dynamics with an existing legislative framework-demonstrating an expansionary form of policy drift. The 1982 Tax Equity and Fiscal Responsibility Act created a policy space that gave the new and lightly controlled managed care industry considerable operational discretion. As the interests of the government's private partners changed in response to new market dynamics, a change occurred in the output and performance of the Medicare managed care program. As enrollment and spending increased, Medicare's politics were remade by the political empowerment of the managed care industry and the creation of a new subconstituency of beneficiaries.