Despite a dramatic increase in the size of the Medicare-eligible population due to an aging society, enrollment in traditional Medicare has declined by almost 3% since 2006. This was the result of a significant increase in the share of beneficiaries enrolling in Medicare Advantage plans, according to a new study led by the USC Leonard D. Schaeffer Center for Health Policy and Economics.
The findings, published this week in Health Affairs, have important policy implications. Current Medicare Advantage payment policy was designed in an era when the bulk of enrollees chose traditional Medicare. The formula by which plans are paid are rooted in the average cost per beneficiary in traditional Medicare in each county. Now, Medicare Advantage policy makers must prepare to make necessary adjustments as fewer enrollees are choosing traditional Medicare each year.
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