Medicare choices spark revolving door for older adults

Right now across the country, tens of millions of older adults and people with serious disabilities have a choice to make: whether to stick with their current Medicare option, or change during Open Enrollment.

One of the biggest decisions they face is whether to go with a Medicare Advantage plan offered by an insurance company, or traditional Medicare coverage offered directly by the federal government.

If they change from one to the other, a new University of Michigan study finds, they may be entering a revolving door and find themselves changing again in the future.

On average, the study shows, 3% of people with traditional Medicare switch over to an MA plan each year. But when the researchers looked closely at these "switchers", they found that switching to MA was more than twice as common – 6.5% -- among those who had switched from MA to traditional Medicare only one to three years before.

In fact, 9% of those who had jumped from MA to traditional Medicare the year before then switched back to Medicare Advantage, staying just one year in the traditional program. For those who had left MA for traditional Medicare two or three years earlier, the percentage switching back to MA was still much higher than average.

Medicare Advantage plans now cover more than half of all Americans with Medicare, so really understanding patterns like these is important from a policy perspective. What we found here is that it's just not an open-and-shut case that everyone who leaves Medicare Advantage is permanently dissatisfied and will never go back. But what we need to understand more is what is driving this revolving door."

Geoffrey Hoffman, Ph.D., lead author of the new study and an associate professor in the U-M School of Nursing

Previous research has suggested that people might switch from MA to traditional Medicare when they develop a serious health condition that might lead them to want the less-restrictive choice in doctors and hospitals that traditional Medicare offers.

But the researchers found that there was no major difference in MA switching patterns among people who had been diagnosed with Alzheimer's disease or another form of dementia, or had a chronic disease.

"Older adults have an enormous number of Medicare Advantage choices," said Donovan Maust, M.D., M.Sc., the study's senior author and a geriatric psychiatrist at the U-M Medical School. "Understanding how they make their choices to either enroll or disenroll is important for their own health and finances, but understanding and supporting these plan changes has big implications for U.S. policy and the federal budget."

The researchers examined data from nearly 4 million people who were enrolled in traditional fee-for-service Medicare in 2017 through 2019.

One factor they could not look at directly, but tried to examine, was whether people switched back to Medicare Advantage after being in traditional Medicare because their health status made them unable to get a Medigap plan to cover some of the out-of-pocket costs they might incur in traditional Medicare.

Most states do not require insurers to ensure that people have the right to purchase Medigap plans regardless of their health status, except for an initial period after they enroll in Medicare for the first time.

However, when the researchers looked at people with Alzheimer's disease living in states with no guaranteed-issue clause for Medigap plans, they did not find a significant difference in switching behavior.

Hoffman is now looking further at Medicare Advantage experiences among people with Alzheimer's or other forms of dementia, through funding from the National Institute on Aging.

He notes that the multiple-switching behavior seen in the new study may be an indication of people acting as savvy consumers on the Medicare Advantage marketplace. That's because those who came back to Medicare Advantage after being in traditional Medicare for a year or more were much more likely to choose an MA plan with a higher star rating for quality, or a plan with a broader network.

"They may be shopping in a logical manner," he said. Or it may be that MA plans were able to target them for marketing materials based on the information the plans had on file from their prior enrollments.

No matter what, he said, the costs of the administrative tasks needed to transition someone from one form of Medicare coverage to another do add up – both for staff time on the federal government and insurance company side, and time spent by participants and their caregivers.

For individuals and their caregivers during this Open Enrollment season, Hoffman advises being very careful to look at total costs and access to providers and hospitals, not just monthly premiums, when deciding whether to stay in, switch to, or jump out of Medicare Advantage.

This is important, but potentially overwhelming, given the large number of choices available to many beneficiaries. While the Medicare PlanFinder has information about costs, individuals will need to go to the websites of plans, providers and hospitals to determine which ones are in-network.

It's also important to understand a state's policy about a Medigap coverage guarantee, when deciding whether to switch to traditional Medicare after a time in Medicare Advantage. Only a handful of states have protections in place to guarantee purchase of those plans.

"The bottom line is, plan carefully, and be a savvy consumer," Hoffman said. "There are so many choices, and you can get free assistance with choosing the one for you."

Medicare enrollment assistance is available for free in every state via the SHIP program. Find the one for your state via https://www.shiphelp.org/

Both Hoffman and Maust, and co-authors Hyungjin (Myra) Kim, Sc.D., M.A. and Lillian Min, M.D., MSHS, are members of the U-M Institute for Healthcare Policy and Innovation. Other co-authors are Zhaohui Fan, M.D., M.P.H. and Yang Amy Jiao M.P.P.

The study was funded by the NIA, which is part of the National Institutes of Health, through grant R01AG074944. This content is solely the responsibility of the authors and does not necessarily represent the official views of the National Institute on Aging.