No Itch to Switch: Few Medicare Beneficiaries Switch Plans During the Open Enrollment Period
Each year, Medicare beneficiaries in private Medicare Advantage plans and Part D stand-alone prescription drug plans (PDPs) have the opportunity to change plans during the annual open enrollment period (October 15 to December 7). Medicare’s private plans vary significantly from each other and can change from one year to the next, which can have a significant impact on enrollees’ coverage and costs. The Centers for Medicaid & Medicare Services (CMS) encourages beneficiaries to shop for Medicare Advantage and prescription drug plans to potentially save money on prescriptions or get new benefits.
Understanding how Medicare private plan markets are working is increasingly important for both beneficiaries and the Medicare program overall. Many presidential candidates and policymakers have proposed establishing a public program, modeled on Medicare, to expand coverage, while others want to expand the role of private plans within Medicare itself. To inform these discussions, this analysis examines the share of people enrolled in Medicare Advantage prescription drug plans (MA-PDs) and PDPs who switched plans for the following year during the open enrollment periods between 2007 and 2016, the most current year available for analysis of Medicare private plan switching rates. This analysis excludes enrollees with low-income subsidies; more detailed methods are described below.
- Overall, a small share of MA-PD and PDP enrollees without low-income subsidies (8% and 10%, respectively) voluntarily switched to another plan during the 2016 annual open enrollment period for the 2017 plan year (Figure 1).
- Among 9.4 million MA-PD enrollees without low-income subsidies, 7.6 percent (710,000 beneficiaries) voluntarily switched to another MA-PD during the 2016 open enrollment period for 2017, and another 0.9 percent (90,000 beneficiaries) switched from an MA-PD to traditional Medicare (with a PDP). Among 11.7 million PDP enrollees without low-income subsidies, 8.3 percent (980,000 beneficiaries) switched to another PDP and another 1.7 percent (200,000 beneficiaries) switched to an MA-PD during the 2016 open enrollment period for 2017. (A very small share of Part D enrollees switch to MA-only plans or traditional Medicare without Part D coverage; they are excluded from this analysis.)
- A substantial majority of Medicare private plan enrollees have not voluntarily switched plans in any given year over the time period of this analysis. During the open enrollment periods between 2007 and 2016, the share of enrollees without low-income subsidies voluntarily switching plans for the coming year ranged between 6 and 11 percent for people in Medicare Advantage drug plans, and between 10 and 13 percent among those in stand-alone drug plans (Figure 2).
- Some share of people who did not switch in any given year are beneficiaries who were enrolled in plans that exited the market and were “crosswalked” (i.e., automatically enrolled) by their plan sponsor into a new plan the following year. This means their plan is different from the previous year, but they did not voluntarily choose a new plan. For the 2017 plan year (corresponding to the 2016 open enrollment period), this comprised roughly 8 percent of MA-PD enrollees and 3 percent of PDP enrollees. Another small share of enrollees involuntarily switched MA-PDs (3%) or PDPs (<1%) because their plan exited the market for 2017 and they were not automatically crosswalked into a new plan.
- Based on our analysis of the Medicare Current Beneficiary Survey, in 2017, more than one in three (35%) Medicare beneficiaries living in the community said it is very or somewhat difficult to compare Medicare options, and this share increased among beneficiaries in fair or poor self-reported health (44%) and with five or more chronic conditions (40%).
- In 2017, nearly half (45%) of people on Medicare living in the community said they rarely or never review or compare their Medicare options; the share was substantially higher among beneficiaries ages 85 and older (57%).
With an average of 28 Medicare Advantage plans and 28 stand-alone Part D plans available to beneficiaries in 2020, beneficiaries have dozens of plan options from which to choose. Relatively low rates of plan switching during the open enrollment period could indicate that beneficiaries are generally satisfied with their current plan and therefore have little motivation to compare and switch plans, or they may be actively choosing to remain in their plan after comparing other available options.
But, low switching rates could also indicate that many beneficiaries find the process of comparing plans too challenging, are unaware of the open enrollment period, or have limited confidence in their ability to choose a better plan. Both Medicare Advantage and stand-alone drug plans can vary significantly in terms of premiums, deductibles, cost sharing, provider and/or pharmacy networks, and drugs covered, among other plan features. Comparing all of these factors simultaneously is the best way to maximize value and lower costs, but it is also time consuming and challenging, especially for beneficiaries with cognitive impairments or serious health needs.
Our finding that a majority of MA-PD and PDP enrollees stay in the same plan during the annual open enrollment period may not be a concern, but it raises a question as to whether “stickiness” leads to avoidable costs, or unrealized benefits, for a large share of the Medicare population. The finding that nearly half of all Medicare beneficiaries say they never or rarely compare plans suggests that many beneficiaries may be unaware of important differences across plans that could have a significant impact on their coverage, costs, and, in the case of Medicare Advantage plans, access to certain providers. This is not surprising given the sheer number of Medicare private plans now available and the many ways in which they differ. Given that some presidential candidates and policymakers are discussing proposals to build on Medicare and the marketplace model or to broaden the role of private plans in Medicare, understanding the barriers that people on Medicare experience will continue to be important for policy discussions.
Wyatt Koma, Juliette Cubanski, Gretchen Jacobson, and Tricia Neuman are with KFF. Anthony Damico is an independent consultant.