Medicare Advantage (MA) has grown rapidly in the past decade, from about a third of Medicare enrollment in 2015 to over half in 2024. The growth of MA has important implications for the financial sustainability of the Medicare program because Medicare, on average, pays more for a beneficiary enrolled in MA than for a similar beneficiary enrolled in traditional Medicare (TM). This paper explores the patterns and potential drivers of MA enrollment growth over the 2017–23 period, using administrative data available from the Centers for Medicare and Medicaid Services. Increased enrollment in preferred provider organization plans accounted for 35 percent of MA enrollment growth. Special needs plans, which largely enroll beneficiaries dually eligible for Medicare and Medicaid, accounted for nearly a third of the growth in MA over the 2017–23 period. Nearly 40 percent of MA enrollment growth was in the South Atlantic and East North Central regions.
Our multivariate analysis found that MA growth was greater in counties that started with lower shares of beneficiaries in MA, suggesting that MA enrollment growth may be starting to top out in high-penetration counties. We also found that MA growth was higher in counties with lower benchmarks. Counties with high MA benchmarks already had high MA penetration in 2017 and therefore had less room for growth over the study period. MA grew more in counties with a higher share of beneficiaries under age 65 and a higher share of traditional Medicare beneficiaries who are duals. We also found that counties with more emergency department and home health use but fewer inpatient hospitalizations and less skilled nursing facility use had more MA enrollment growth. This suggests MA plans may be disproportionately entering or competing for enrollment in markets where there appears to be utilization that MA can control.
Overall, MA growth between 2017 and 2023 appears to be driven by populations and in geographic areas that were not historically the primary source of MA enrollment. Dual eligibles, beneficiaries interested in broader networks via PPOs, and geographic areas with historically low MA penetration all saw significant increases in MA enrollment over our study period.
