In 2005, the year I started focusing my practice on Medicare plans, fewer than 14% of Medicare beneficiaries, or roughly 6 million people, were enrolled in Medicare managed care products. By the end of 2021, more than 26 million people, or 42% of Medicare beneficiaries, were in Medicare Advantage, and more than 46% of Medicare spending flows through this program. Basically, in the last 17 years, Medicare Advantage transitioned from being a niche managed care option towards becoming the standard way that Americans receive their Medicare benefits.
Looking forward, the Congressional Budget Office projects that Medicare Advantage enrollment will rise to 51% of Medicare beneficiaries by 2030, and the Medicare Payment Advisory Commission (MedPAC) forecasts even faster growth, expecting enrollment in Medicare Advantage to surpass 50% in 2023. There are already 50% or more of Medicare beneficiaries enrolled in Medicare Advantage in Alabama, Minnesota, and Florida, and over 80% in Puerto Rico.
Although there is some controversy around the value and risks of Medicare Advantage, overall it enjoys bipartisan support that is linked to the support of Medicare Advantage participants for their plans. Before releasing the 2023 Medicare Advantage and Part D Advanced Notice, CMS received a letter from a bipartisan group of 346 members of the U.S. House of Representatives urging that it maintain stability in Medicare Advantage when issuing its proposed pricing for 2023. This bipartisan action followed a Morning Consult poll that showed that 92 percent of Medicare Advantage beneficiaries consider a candidate’s support for the program as important to their vote. With the political backing of a large segment of voters over 65, the future of the Medicare Advantage program looks very bright.
With the success of Medicare Advantage comes heightened government scrutiny for plans. If over $343 billion in federal dollars flow through this program, there will be significant regulator attention to how that money is spent. We see risk adjustment as the greatest oversight focus of regulators, including CMS, OIG, and DOJ, though its participation in whistleblower lawsuits under the False Claims Act.
The 2023 Advanced Notice is relatively favorable to Medicare Advantage plans. It proposes an effective growth rate of 4.75%, which is slightly higher than the growth rate in 2022. It also includes proposals that reflect the priorities of the current administration, such as Star Ratings quality measure assessing how often plans screen for common social determinants of health, such as food or housing insecurity or transportation difficulties. Comments on the Advanced Notice are due March 4.