Understanding Medicare Advantage: Growth and Enrollment

The Trump administration has signaled that changes may be ahead for the Medicare program, the health insurance program for older adults and people with certain disabilities. In addition, Dr. Mehmet Oz, who has been confirmed to lead the Centers for Medicare and Medicaid Services, previously shared interest in expanding Medicare Advantage, the program that administers Medicare benefits through private insurance plans, as a strategy to decrease federal Medicare spending.

In this blog series, we will discuss Medicare Advantage enrollment, spending, and health outcomes to better understand several of the key considerations that can guide Medicare policy and program decisions.

Understanding Medicare Advantage

Traditional Medicare, which pays for services on a fee-for-service basis, includes Parts A and B, while requiring beneficiaries to receive prescription drug coverage through a separate Part D plan. Medicare Advantage, also called Part C, bundles coverage for Medicare Parts A, B, and D, and includes benefits not covered by traditional Medicare, such as dental, vision, hearing, and fitness. Unlike traditional Medicare, Medicare Advantage plans typically restrict members to using providers within the plan’s network, require prior authorization for drugs and services, and provide additional care management services. Exhibit 1 summarizes the key differences between traditional Medicare and Medicare Advantage coverage.

Exhibit 1. How Medicare Advantage Plans Compare to Traditional Medicare

Traditional Medicare		Medicare Advantage	Add-on option to Traditional Medicare
Part A	Part B	Part C	Part D
Inpatient coverage (e.g., hospital stays)	Outpatient coverage (e.g., doctor appointments)	Includes Parts A and B, and often Part D, as well as benefits such as dental, hearing, vision, fitness, etc.	Prescription drug coverage

Growth in Medicare Advantage Enrollment

Medicare Advantage has become increasingly popular among beneficiaries in recent years. In 2024, 32.8 million people, or 54% of Medicare beneficiaries, were enrolled in a Medicare Advantage plan with estimates projected to reach 64% by 2034. Enrollees include high rates of beneficiaries from diverse racial and ethnic groups as well as a growing number of individuals dually eligible for Medicare and Medicaid. Between 2006 and 2022, the share of people switching from traditional Medicare to Medicare Advantage more than tripled.

The rising popularity of Medicare Advantage is likely due to multiple factors, such as the low to no premiums charged by plans, inclusion of supplemental benefits like vision and dental coverage in many plans’ offerings, and out-of-pocket spending limits; this is in stark contrast to traditional Medicare, which offers none of these benefits.

Characteristics of Medicare Advantage Enrollees

• More Women Choose Medicare Advantage – Women make up a slightly higher percentage of Medicare Advantage beneficiaries (57%) compared to traditional Medicare (54%).

• Urban Residents Are More Likely to Enroll – Medicare Advantage enrollees are more likely to live in urban areas, whereas traditional Medicare has a higher proportion of rural residents.

• Representation is Higher Among Different Populations – Medicare Advantage enrolls nearly twice the rate of Black and Hispanic/Latinx beneficiaries compared to traditional Medicare. In 2022:

  • 13% of Medicare Advantage enrollees were Black, compared to 7% in traditional Medicare.

  • 12% of Medicare Advantage enrollees were Hispanic, compared to 6% in traditional Medicare.

• Lower-Income Beneficiaries More Likely to Enroll – A higher percentage of low-income individuals (earning less than $40,000 per year) are enrolled in Medicare Advantage compared to traditional Medicare.

• Education Levels Differ – Medicare Advantage has a lower percentage of college-educated beneficiaries, whereas traditional Medicare enrollees are more likely to have a degree.

• Enrollment is Growing, with Shifting Patterns – Between December 2021 and December 2022, certain groups moved to Medicare Advantage at higher rates:

  • Black beneficiaries had the highest switching rate (15.6%), followed closely by Hispanic/Latinx beneficiaries (15.0%).

  • Asian and American Indian or Alaska Native beneficiaries switched at a rate of 9.4%.

  • White beneficiaries switched at a lower rate (6.4%) than other races/ethnicities.

  • Beneficiaries with disabilities switched at a rate of 12.4%.

  • Beneficiaries who switched from traditional Medicare to Medicare Advantage have tended to be disproportionately healthy compared to beneficiaries who switched from Medicare Advantage to traditional Medicare, who are disproportionately less healthy.

However, it is also important to note that beneficiaries living in rural areas were less likely to switch from traditional Medicare to Medicare Advantage but more likely to switch from Medicare Advantage to traditional Medicare. For this population specifically, the provider networks covered under Medicare Advantage plans are often geographically inaccessible to rural communities making provider flexibility offered under traditional Medicare more appealing. In addition, high-need and high-cost beneficiaries tend to more frequently switch from Medicare Advantage to traditional Medicare. This may signal a gap in services available to Medicare Advantage enrollees potentially due in part to utilization management efforts, including prior authorizations, put in place to control costs. The number of services that require prior authorization from a beneficiary’s plan in Medicare Advantage is 200% higher than those in traditional Medicare. Insurers argue the money saved through prior authorizations may allow for additional benefits and lower costs for beneficiaries in Medicare Advantage, but this may come at another price for beneficiaries and providers.

New Blog Series: Understanding Medicare Advantage

Increased privatization of Medicare could lead to increased administrative burdens and delays or denials in necessary care for beneficiaries who depend on Medicare coverage for access to necessary services and support. Policymakers need more research to understand the differences in spending between the programs and to examine whether increased investment in Medicare Advantage will result in cost and health savings for the federal government and for beneficiaries. In the next blog in this series, Understanding Medicare Advantage, Aurrera Health will examine spending trends associated with traditional Medicare and Medicare Advantage plans before we wrap up the series with a look at how health and health care outcomes compare between Medicare Advantage and traditional Medicare beneficiaries.

Want to Learn More?

Understanding Medicare Advantage trends is important for beneficiaries and their families/caregivers, policymakers, providers, health plans, advocates, and community partners. Aurrera Health Group is experienced in providing policy analysis, program design and implementation, and strategic planning to public, private, and nonprofit organizations. If you would like to learn more about how Aurrera can help your organization better understand and plan for trends in Medicare Advantage, please reach out to Kristal Vardaman and Megan Thomas.

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Authors

Emma Boucher [Policy Associate]

Vimbai Madzura [Deputy Director]

Kristal Vardaman [Managing Principal]