Medicare Advantage Proliferation and the Cluttered Plan Landscape

In 2018, the average Medicare beneficiary had 21 Medicare Advantage (MA) plans from six insurers to choose from. By 2024, just six years later, the number had doubled to 43 plans from eight organizations. This steep increase in the number of plans is not due to a nationwide expansion in the breadth of services covered by MA, nor is it due to a diversification of the insurance companies offering MA plans. Rather, it is largely because of a 2019 rollback by the Centers for Medicare & Medicaid Services (CMS) of the “meaningful difference” rule, which required MA plans from the same insurer to be “substantially different…with respect to key plan characteristics such as premiums, cost sharing, or benefits.” This rule elimination has led to the recent proliferation of MA plans and driven the accompanying surge in MA enrollment, which increased to 54% of Medicare beneficiaries in 2024.

Part 2: Medicare Advantage Proliferation

The second part of the Medicare Rights Center’s policy series on Medicare sustainability addresses the cluttered MA plan landscape and its consequences for beneficiary coverage and federal spending. Based on independent analysis, the Part 2 issue brief highlights policy solutions to both mitigate MA plan proliferation and better equip Medicare beneficiaries to navigate the overloaded MA market.

Choice Overload

With the “meaningful difference” requirement no longer in place, many insurers have flooded the market with plans that vary only slightly in supplemental benefits or cost-sharing for certain services. Such plans may vary more significantly in their network directories, but Medicare Plan Finder doesn’t allow users to filter by providers or even display provider directories to consumers comparing plans. This places the burden upon Medicare beneficiaries to individually consult each plan’s directory or contact their providers to learn the details they need to make an informed enrollment decision.

This choice overload—making it difficult and time-consuming to even navigate the plan offerings—may be part of MA organizations’ strategy to retain consumers. A greater number of plans, especially when they include “affinity plans” targeting certain populations, makes it more difficult to make an informed choice and more intimidating to switch plans, much less insurers. The overwhelm also often drives people with Medicare to seek help from brokers or agents, who may be financially incentivized by particular insurers to promote their plans.

Using this and other strategies like favorable selection, denials, and upcoding, MA reaps incredibly high profit margins through overpayment. In 2023, MA plans had gross margins over twice those of Medicaid managed care plans and group market plans. As MA plans raise their profit margins, beneficiaries suffer: Drawn in by MA’s promises of supplemental benefits and pushed to enroll with inadequate information, they may find themselves locked into a plan that doesn’t work for them and unable to afford or navigate a switch to another plan or to Original Medicare. and unable to afford or navigate a switch to another plan or to Original Medicare.

Needed Policy Reforms

MA proliferation can be addressed by policies that directly regulate MA plans, mitigate overpayment and other financial incentives for insurers and individual brokers, and strengthen counseling and educational resources for Medicare beneficiaries. Most directly, CMS could reinstate the “meaningful difference” requirement and standardize plans—as they have done for Medigap and certain Affordable Care Act Marketplace plans—to reduce confusion and advance equity. Closing loopholes that allow for upcoding and overpayment, as well as regulating broker payments, could reduce some of the financial incentives that motivate MA organizations to go to great lengths to retain consumers.

People with Medicare need better information and resources from CMS that directly address their primary decision-making considerations. Federal resources for Medicare beneficiaries, such as Medicare Plan Finder and State Health Insurance Assistance Program (SHIP) counselors need to be better publicized and funded. Medicare Plan Finder, though a valuable source of information, lacks critical search features like the ability to search by providers, and the expert enrollment counseling provided by SHIP counselors is hampered by federal underfunding. A policy emphasis on greater access to information would empower Medicare beneficiaries to understand plan offerings and choose the ones that best fit their needs.

For more on this topic, explore Part 2 on Medicare Advantage Proliferation from the Medicare Sustainability policy series available now at www.medicarerights.org/policy-series/medicare-sustainability.

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