Medicare Beneficiaries Hardly ever Change Their Protection Throughout Open Enrollment


During the annual open enrollment period that runs from October 15 through December 7, the 65 million Medicare beneficiaries in traditional Medicare and Medicare Advantage are encouraged to compare their current coverage to other options in their area to see if they could save money or get better coverage for their needs by switching. The coverage offered by Medicare Advantage drug plans and stand-alone drug plans for beneficiaries in traditional Medicare varies across plans and from year to year. Plans can make changes that impact enrollees’ premiums, out-of-pocket costs, access to medications, and provider and pharmacy networks. The rate of plan switching could signal that beneficiaries are taking advantage of the annual opportunity to improve their coverage or lower their costs.

This analysis examines the share of Medicare beneficiaries who switched their coverage during the open enrollment period for 2020, as well as trends in the rate of switching going back to 2008. Specifically, we look at enrollees in Medicare Advantage prescription drug plans (MA-PDs) and traditional Medicare beneficiaries enrolled in stand-alone Part D prescription drug plans (PDPs), excluding enrollees who receive Medicare Part D low-income subsidies (LIS). We exclude LIS enrollees because they have a more limited set of premium-free PDP choices and because some are auto assigned to new plans every year by CMS (see methods box for more information).

Most Medicare Beneficiaries with Medicare Advantage or Stand-Alone Prescription Drug Coverage Did Not Switch Between 2019 and 2020

Among the 11.3 million Medicare Advantage enrollees in 2019, 10 percent (1.2 million) voluntarily switched plans during the open enrollment period for 2020. Among the relatively small share of MA-PD enrollees who switched plans, most enrolled in another MA-PD (1.1 million or 10% of all MA-PD enrollees), while a very small share switched to traditional Medicare and enrolled in a PDP (54,155 or less than 1% of MA-PD enrollees).

A larger share of traditional Medicare beneficiaries enrolled in PDPs than enrollees in MA-PDs voluntarily switched plans during the open enrollment period for coverage in 2020 (21% vs 10%). Among the 13.1 million PDP enrollees, 18 percent (2.3 million) switched to another PDP and 3 percent (438,000) switched to a MA-PD for coverage in 2020 (Figure 1). The larger share of PDP enrollees than MA-PD enrollees voluntarily switching plans during the open enrollment period is likely due to changes to the lineup of Humana PDPs between 2019 and 2020, which would have required many enrollees to pay substantially higher premiums in 2020 unless they switched plans.

Between 2008 and 2020, A Small Share of Medicare Advantage and Prescription Drug Plan Enrollees Switched Plans During the Annual Open Enrollment Period

Across the 13 annual open enrollment periods we examined for coverage in 2008 through 2020, a small, and relatively constant share of MA-PD enrollees voluntarily switched plans, ranging from 6 percent to 12 percent. Between 2008 and 2020, the share of traditional Medicare beneficiaries enrolled in a PDP that voluntarily switched plans was slightly higher, but also relatively constant, ranging from 10 percent to 13 percent, with a large spike (to 21%) in the open enrollment period for 2020 (Figure 2). As explained above, this one-year increase is likely due to changes to Humana’s PDP offerings for that year.

The Share of Medicare Beneficiaries Who Switch Medicare Advantage or Prescription Drug Plans Generally Declines with Age

Among Medicare beneficiaries enrolled in a Medicare Advantage or stand-alone prescription drug plan, those in their mid to late sixties were more likely to voluntarily switch plans during the annual open enrollment period than older beneficiaries. Among the MA-PD enrollees, 11 percent of those ages 65 to 69 switched plans in 2020, compared to 7 percent of those age 85 and older. The age differences were even larger for the PDP enrollees in 2020. One-quarter (25%) of PDP enrollees ages 65 to 69 switched plans in 2020 compared to 11 percent of those ages 85 and older (Figure 3). (The age difference was considerably smaller the year before but followed the same pattern, with 15% of PDP enrollees ages 65 to 69 switching plans compared to 8% of those ages 85 and older.)

Discussion

During the Medicare open enrollment period for 2020, Medicare beneficiaries had an average of 24 Medicare Advantage prescription drug plans and 28 stand-alone Part D prescription drug plans to choose from for their coverage. Despite having so many Medicare options, relatively few Medicare private plan enrollees opted to switch their coverage. The decision to keep their current plan could indicate that most Medicare private plan enrollees were satisfied with their coverage and costs. It could also indicate that enrollees were unaware of potentially substantial differences across plans, or changes to their current plan, that could impact their coverage, out-of-pocket costs, access to medications, and access to providers and/or pharmacies. The low rates of voluntary switching may also suggest that enrollees in Medicare Advantage and stand-alone prescription drug plans find it too difficult or confusing to compare plans, consistent with KFF analysis finding that most Medicare beneficiaries do not review their coverage during the open enrollment period.

The relatively low rate of switching is consistent with “stickiness”, or the tendency for people to stay enrolled in the same health insurance or prescription drug plan year after year, even when other, and potentially better options, are available. The even lower rates of switching among older beneficiaries may suggest that people are less able or willing to compare plans and switch coverage as they age, even though the potential benefits of switching plans may be greater for enrollees as they grow older given that health care needs and costs tend to increase with age. By staying put, older beneficiaries may be more likely than younger beneficiaries to face higher costs or forego improved coverage that could better meet their needs.

One goal of offering some or all Medicare benefits through private plans is that competition between plans allows beneficiaries to choose the combination of cost and coverage that best fit their needs and preferences. And in the current annual open enrollment period for coverage in 2023, most Medicare beneficiaries continue to face a plethora of options. However, a truly competitive market can only be achieved if beneficiaries are willing and able to compare plans on an annual basis to see if there is a better option and then switch plans. The somewhat higher rate of switching among PDP enrollees during the open enrollment period for 2020, which was likely driven by changes to the premiums for one of the largest stand-alone drug plans, suggests that enrollees are responsive to price changes of a large magnitude. But the relatively low rate of overall plan switching that we observe over several years calls into question the premise of competition and choice that, in theory, underlies the Medicare private plan marketplace.

Jeannie Fuglesten Biniek, Juliette Cubanski, and Tricia Neuman are with KFF. Anthony Damico is an independent consultant.

This analysis uses the Centers for Medicare & Medicaid (CMS) Master Beneficiary Summary File, five percent sample of beneficiaries for 2007 to 2016 and twenty percent sample for 2017 to 2020. We examine plan enrollment in December of year 1 (for example, 2019) and January of year 2 (for example, 2020), to identify beneficiaries who switched plans during the annual open enrollment period. An enrollee whose plan exits the market and is not crosswalked into a plan but who has to sign up for a different plan is considered an involuntary switcher. An enrollee whose plan exits the market and is crosswalked into a plan is counted in the “did not switch” category since this beneficiary did not take voluntary action to switch plans.

This analysis focuses only on enrollees who switch plans during the annual Medicare open enrollment period for the coming plan year. Certain Medicare beneficiaries have other opportunities outside of the annual open enrollment period to change their plan or coverage. Examining switching rates during the open enrollment period produces somewhat lower estimates of the rate of switching than looking over the entire calendar year.

The analysis of switching rates excludes: (1) people with end-stage renal disease (ESRD) because they were generally not allowed to enroll in Medicare Advantage plans during the years we analyzed; (2) people in plans sponsored by unions or former employers because they typically cannot switch plans and maintain their retiree health benefits; (3) people who died in the year of the open enrollment period; (4) beneficiaries who switched into traditional Medicare without Part D or a Medicare Advantage plan that does not offer the Part D drug benefit (MA-only plans); (5) beneficiaries not enrolled in both Medicare Parts A and B as of November in the year of open enrollment; and (6) low-income subsidy enrollees, who face different enrollment decisions than non-LIS enrollees due to having a more limited set of PDP choices (i.e., premium-free “benchmark” plans) in order to avoid paying a premium, and because many in PDPs are auto-assigned to new plans every year by CMS; they were excluded from the analysis of Medicare Advantage plan switching to conform with the PDP analysis. As with other Medicare Advantage analyses, we also exclude people enrolled in cost plans, HCPPs, PACE plans, and MMPs.



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