Trends in Selection Into Medicare Advantage.

Area of Science:

• Health Economics
• Public Health Policy
• Gerontology

Background:

• Medicare Advantage (MA) enrollment has surged, more than doubling from 2013 to 2023.
• This growth fuels concerns regarding risk selection, healthcare spending, and the benchmark accuracy of traditional Medicare (TM) spending for MA payments.

Purpose of the Study:

• To analyze Medicare Advantage (MA) selection trends from 2009 to 2020.
• To assess whether MA enrollees exhibit different risk profiles compared to TM enrollees over time.
• To evaluate the implications for Medicare's risk adjustment system.

Main Methods:

• Utilized administrative and Medicare Current Beneficiary Survey data (2009-2020).
• Estimated regression models of TM Part A and B spending based on enrollee characteristics.
• Applied TM spending models to predict costs for MA enrollees to assess risk selection.

Main Results:

• Since 2017, MA enrollees have exhibited 5-6% higher predicted TM spending compared to TM enrollees.
• The increasing proportion of dual-eligible beneficiaries in MA significantly drives these higher predicted costs.
• While MA selection showed little differential risk within groups, TM enrollee characteristics shifted towards lower predicted spending over time.

Conclusions:

• The nature of Medicare Advantage (MA) selection has qualitatively shifted in recent years.
• Diverging enrollee characteristics between MA and TM raise questions about the current risk adjustment system's accuracy.
• Further research is needed to ensure fair and accurate risk adjustment as enrollee populations evolve.