Conservative Proposals Could Accelerate Medicare Advantage Enrollment Shift
Medicare Advantage (MA), the privatized managed care alternative to traditional fee-for-service Medicare, now covers 54% of eligible beneficiaries with projections estimating a rise to 64% by 2034. Two conservative proposals aim to accelerate this shift: the Heritage Foundation's Project 2025 advocates for automatic enrollment of new Medicare eligibles into MA plans unless they opt out, while the Paragon Health Institute suggests requiring affirmative choice between MA and traditional Medicare. These proposals, potentially supported by the current Republican-controlled Congress and administration, could significantly increase MA enrollment.
CMS Administrator Mehmet Oz, a proponent of MA, recently approved a 5% payment increase to MA plans for 2026 despite MA's higher per-enrollee costs compared to traditional Medicare, substantively increasing federal spending on MA to $538 billion in 2025. This trend highlights ongoing concerns related to the Medicare payment system, including issues with flawed risk adjustment and coding intensity inflating MA reimbursements, which may intensify fiscal pressures as the program scales with aging baby boomers.
The expanding Medicare population, combined with increasing utilization and inflation, is projected to drive program costs from $1 trillion in 2023 to $1.9 trillion by 2032. This surge underscores the importance of controlling Medicare expenditures and addressing the financial sustainability challenges posed by an increasing beneficiary-to-worker ratio. While MA offers lower premiums and additional benefits such as vision and hearing coverage, critics argue that these plans come with provider network limitations and potential coverage restrictions.
Debate persists on the default enrollment mechanism for new beneficiaries; critics of the proposals express concern over weakening fee-for-service Medicare, stressing the need for reforms in traditional Medicare, such as introducing catastrophic out-of-pocket spending caps to enhance competitiveness with MA. The enrollment policy changes also raise the requirement for comprehensive beneficiary information to support informed plan selection.
Overall, the push towards privatization of Medicare enrollment encapsulates broader market and regulatory trends influencing the program's structure, costs, and accessibility. Stakeholders emphasize the need to address payment and risk adjustment flaws to mitigate financial risks while ensuring beneficiaries' access to appropriate care and coverage options.