Medicare Advantage 2016 Data Spotlight: Overview of Plan Changes

In 2015, more than 17 million Medicare beneficiaries (31%) are enrolled in Medicare Advantage plans,¹ such as health maintenance organizations (HMOs) or preferred provider organization (PPOs). Medicare Advantage plans are offered as an alternative to the traditional Medicare program. Medicare beneficiaries can enroll in a Medicare Advantage plan, change Medicare Advantage plans, or switch from Medicare Advantage to traditional Medicare during the annual open enrollment period. Changes in the Medicare Advantage marketplace have always been closely watched, and since 2010 when the Affordable Care Act (ACA) was enacted, many have been interested in the effects of the ACA phasing down federal payments to Medicare Advantage plans. More recently, proposed mergers between health insurance firms with large footprints in Medicare Advantage have raised questions about how the mergers could affect beneficiaries.

This spotlight analyzes publicly available data to review the Medicare Advantage plans offered in 2016. It provides updated information describing how Medicare Advantage plan choices are changing in 2016, includes new information on premiums, out-of-pocket limits and other plan features, and examines the role of large firms offering plans in the marketplace. Findings include:

• The average Medicare beneficiary will be able to choose from 19 plans in 2016, a number which has been relatively stable since 2012. Relatively few plans are entering or exiting the Medicare Advantage market, and for the most part, the same plans that were available in 2015 will be available in 2016.
• While the average Medicare beneficiary can choose from many plans, these plans will be offered by a handful of firms. The average beneficiary will be able to choose from plans offered by six firms; one-quarter of beneficiaries nationwide will have a choice of plans offered by three or fewer firms in 2016.
• If enrollees in Medicare Advantage plans with prescription drug coverage (MA-PDs) stay in the same plan between 2015 and 2016, their premiums will increase by 8 percent, on average. Similar to past years, about four-fifths of beneficiaries (81%) will have access to an MA-PD with no premium in 2016.
• Plans’ limits on out-of-pocket costs for Part A and B benefits will rise in 2016, as they have in prior years. Almost two-fifths (39%) of plans will have limits equal to the maximum allowed ($6,700 per year) in 2016, up from 17 percent in 2013.
• Nearly half (45%) of MA-PDs will impose a deductible for Part D prescription drugs in 2016, an increase from 2015, and the average Part D drug deductible will be higher in 2016 than 2015.
• The average quality star rating for plans will be higher in 2016, with substantial growth in the number of contracts with 4 and 4.5 stars.