Medicare Advantage grows in size, percentage of total enrollment

NATIONAL REPORTS-Enrollment in Medicare Advantage plans climbed this year, despite the fact that Medicare Advantage payment rates were frozen at 2010 levels, according to recent research conducted by the Kaiser Family Foundation.

One quarter of Medicare beneficiaries are now enrolled in Medicare Advantage plans. Within these Medicare Advantage plans, 65% of Medicare beneficiaries are enrolled in HMOs, 27% in local or regional PPOs, and just 5% in private fee-for-service plans.

This increase in Medicare Advantage enrollment can be traced to two key trends. The first is the sheer number of new beneficiaries as more of the baby boom generation reaches the age of Medicare eligibility.

The second trend driving the popularity of Medicare Advantage plans is the fact that, prior to enrolling in Medicare, more of the Medicare-eligible population have experience and have become comfortable with managed care plans.

"Many of these people are familiar with managed care, which was not the case for the people going into Medicare 10 years ago," notes Donahue. "They are used to having copayments. They are used to having some type of health insurance. They are more aware of the need for health insurance."

Other issues are also playing a role in the growing popularity of Medicare Advantage plans. As larger hospitals and more well-known providers participate in managed care plans, individuals will be more drawn to Medicare Advantage plans, says Christina Frizzera, senior advisor with Leavitt Partners in Salt Lake City, Utah. For example, in Maryland, the entry of Johns Hopkins University and the University of Maryland Medical Center have served to make Medicare Advantage plans more popular in that region.