MedPAC disputes that half of new Medicare enrollees pick Advantage

Half of new Medicare beneficiaries are opting for private plans over the traditional fee-for-service program. That's a statistic that's been reported by Modern Healthcare and other publications in recent years. Healthcare consultant John Gorman, one of the foremost experts on Medicare Advantage, has frequently touted it.

It's a startling figure given that roughly 10,000 individuals are aging into Medicare every day and helps explain why health plans with significant Medicare business have fought so tenaciously (and often successfully) against proposed cuts to the program in recent years.

But there's one problem with the statistic: it's not accurate, according to the Medicare Payment Advisory Commission. In 2012, enrollment in Medicare grew by 2 million beneficiaries. At the same time, the number of individuals enrolled in Medicare Advantage increased by 1 million. That seems to suggest that half of those new beneficiaries opted for private plans over the fee-for-service program.

But according to MedPAC, just 600,000 new beneficiaries out of 2.5 million opted for Medicare Advantage plans in 2012. That's 24%—or nowhere near half.

The confusion is over when individuals enroll in Advantage plans. Many individuals originally opt for the fee-for-service program, but then switch to private coverage. According to MedPAC, 21% of individuals who became eligible for Medicare in 2009 initially opted for an Advantage plan. But by the end of 2012, 29% of those newly eligible in 2009 were enrolled in private plans. That churn accounts for the additional 400,000 individuals added to the Medicare Advantage roles in 2012.

So what's the origin of this myth? The CMS. Specifically, page 75 of this 2012 report (PDF) by the federal agency on national health spending.

“Enrollment in Medicare for all beneficiaries (fee-for-service and Medicare Advantage) jumped 4.1 percent in 2012—the largest one-year increase in enrollment in thirty-nine years – and more than half of these enrollees joined Medicare Advantage.”

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