Medicare Advantage and Traditional Medicare: Is the Balance Tipping?

A growing share of Medicare beneficiaries have been enrolling in Medicare Advantage plans over the past decade, prompting some to question whether the balance between traditional Medicare and Medicare Advantage could be on the verge of tipping. Since 2006, the share of Medicare beneficiaries enrolled in a Medicare Advantage plan has nearly doubled, from 16 to 31 percent, but in some counties, the percentage is much higher. In this brief, we look beneath national trends to examine Medicare Advantage penetration rates and growth rates in counties across the country to assess the extent to which Medicare Advantage plans are poised to cover more beneficiaries than traditional Medicare across the country.

Medicare Advantage penetration rates and patterns of growth vary widely across the country, reflecting the diversity of markets and coverage decisions of beneficiaries. More specifically, we find:

• A small share (9%) of all Medicare beneficiaries lives in an area where at least 50 percent of all beneficiaries are in a Medicare Advantage plan. Another 21 percent of all Medicare beneficiaries are living in a county with 40-50 percent Medicare Advantage penetration.  Beneficiaries living in areas with high Medicare Advantage penetration (≥40%) tend to be clustered in more populated urban areas, in a small number of states, and a small share of counties. For example, Medicare Advantage penetration is at or above 50 percent in 2015 in just 4 percent of all counties.
• One-quarter of all Medicare beneficiaries (25%) lives in an area with relatively low Medicare Advantage enrollment (<20%). Another 23 percent of Medicare beneficiaries live in a county where Medicare Advantage penetration is below the national average (between 20 and 30%). Together, about half of all Medicare beneficiaries nationwide live in a county where Medicare Advantage penetration is at or below the national average, and where traditional Medicare covers the majority of beneficiaries.
• A small share of Medicare beneficiaries (13%) lives in an area where Medicare Advantage penetration rates have grown relatively rapidly in recent years (≥ 15% average annual growth rate since 2010, double the 7.5% national average). In contrast, half of all beneficiaries live in an area where Medicare Advantage penetration rates have increased by less than 5 percent annually since 2010, below the national average.

This analysis finds a small but growing share of the Medicare population living in a county with more beneficiaries in Medicare Advantage plans than traditional Medicare. Even as Medicare Advantage enrollment continues to rise, traditional Medicare is the primary source of coverage for the majority of beneficiaries in the majority of counties across the country. While the balance between traditional Medicare and Medicare Advantage may tip at some point in the future, it hasn’t happened yet.