Understanding Why Beneficiaries Leave Medicare Advantage Plans

Over half of older Americans currently receive their Medicare coverage through Medicare Advantage (MA) plans offered by private insurance companies. However, many choose to switch plans or revert to traditional Medicare during the annual Open Enrollment period each fall. Understanding the reasons behind these decisions has been challenging for researchers, partly due to limited data access, but recent studies provide new insights.

A study published in Health Affairs sheds light on the primary motivations for beneficiaries to change their Medicare coverage. The findings indicate that issues related to access to care and dissatisfaction with the quality of care are more influential than out-of-pocket costs in driving switches within MA plans. Specifically, enrollees who experience difficulties in obtaining necessary care or are unhappy with their care's perceived quality are more likely to change plans. Those in poor health are especially prone to leave MA for traditional Medicare, largely due to dissatisfaction with access.

Lead researcher Geoffrey Hoffman, Ph.D., an associate professor at the University of Michigan School of Nursing, explains that the study also highlights the role of plan quality ratings. Enrollees in plans with low star ratings or low benefit generosity tend to switch more frequently. Interestingly, the research suggests that those who stay in MA are often searching for better service, while those who switch to traditional Medicare are usually driven by unmet health needs and access issues.

The study utilized anonymous survey data linked with Medicare enrollment records, focusing on beneficiaries who had experienced at least eight months in their MA plan. It confirmed that dissatisfaction with access, care quality, and plan ratings significantly influences switching behavior.

Drivers of plan departure also have substantial implications for Medicare's financial management. When high-cost beneficiaries leave MA plans and return to traditional Medicare, costs for the government increase. Additionally, beneficiaries with serious health issues may face higher out-of-pocket costs after switching, especially in states where Medigap Supplemental plans—which help cover additional costs—are less accessible.

Overall, this research underscores the importance of plan quality and affordability, and highlights the ongoing need for transparent information to help beneficiaries make informed choices about their Medicare options.