No Itch to Switch: Few Medicare Beneficiaries Switch Plans During the Open Enrollment Period
Each year, Medicare beneficiaries in private Medicare Advantage plans and Part D stand-alone prescription drug plans (PDPs) have the opportunity to change plans during the annual open enrollment period (October 15 to December 7). Medicare’s private plans vary significantly from each other and can change from one year to the next, which can have a significant impact on enrollees’ coverage and costs. The Centers for Medicaid & Medicare Services (CMS) encourages beneficiaries to shop for Medicare Advantage and prescription drug plans to potentially save money on prescriptions or get new benefits.
Understanding how Medicare private plan markets are working is increasingly important for both beneficiaries and the Medicare program overall. Many presidential candidates and policymakers have proposed establishing a public program, modeled on Medicare, to expand coverage, while others want to expand the role of private plans within Medicare itself. To inform these discussions, this analysis examines the share of people enrolled in Medicare Advantage prescription drug plans (MA-PDs) and PDPs who switched plans for the following year during the open enrollment periods between 2007 and 2016, the most current year available for analysis of Medicare private plan switching rates. This analysis excludes enrollees with low-income subsidies; more detailed methods are described below.
Overall, a small share of MA-PD and PDP enrollees without low-income subsidies (8% and 10%, respectively) voluntarily switched to another plan during the 2016 annual open enrollment period for the 2017 plan year (Figure 1).
Among 9.4 million MA-PD enrollees without low-income subsidies, 7.6 percent (710,000 beneficiaries) voluntarily switched to another MA-PD during the 2016 open enrollment period for 2017, and another 0.9 percent (90,000 beneficiaries) switched from an MA-PD to traditional Medicare (with a PDP). Among 11.7 million PDP enrollees without low-income subsidies, 8.3 percent (980,000 beneficiaries) switched to another PDP and another 1.7 percent (200,000 beneficiaries) switched to an MA-PD during the 2016 open enrollment period for 2017. (A very small share of Part D enrollees switch to MA-only plans or traditional Medicare without Part D coverage; they are excluded from this analysis.)
A substantial majority of Medicare private plan enrollees have not voluntarily switched plans in any given year over the time period of this analysis. During the open enrollment periods between 2007 and 2016, the share of enrollees without low-income subsidies voluntarily switching plans for the coming year ranged between 6 and 11 percent for people in Medicare Advantage drug plans, and between 10 and 13 percent among those in stand-alone drug plans (Figure 2).
Some share of people who did not switch in any given year are beneficiaries who were enrolled in plans that exited the market and were “crosswalked” (i.e., automatically enrolled) by their plan sponsor into a new plan the following year. This means their plan is different from the previous year, but they did not voluntarily choose a new plan. For the 2017 plan year (corresponding to the 2016 open enrollment period), this comprised roughly 8 percent of MA-PD enrollees and 3 percent of PDP enrollees. Another small share of enrollees involuntarily switched MA-PDs (3%) or PDPs (<1%) because their plan exited the market for 2017 and they were not automatically crosswalked into a new plan.
Based on our analysis of the Medicare Current Beneficiary Survey, in 2017, more than one in three (35%) Medicare beneficiaries living in the community said it is very or somewhat difficult to compare Medicare options, and this share increased among beneficiaries in fair or poor self-reported health (44%) and with five or more chronic conditions (40%).
In 2017, nearly half (45%) of people on Medicare living in the community said they rarely or never review or compare their Medicare options; the share was substantially higher among beneficiaries ages 85 and older (57%).
With an average of 28 Medicare Advantage plans and 28 stand-alone Part D plans available to beneficiaries in 2020, beneficiaries have dozens of plan options from which to choose. Relatively low rates of plan switching during the open enrollment period could indicate that beneficiaries are generally satisfied with their current plan and therefore have little motivation to compare and switch plans, or they may be actively choosing to remain in their plan after comparing other available options.
But, low switching rates could also indicate that many beneficiaries find the process of comparing plans too challenging, are unaware of the open enrollment period, or have limited confidence in their ability to choose a better plan. Both Medicare Advantage and stand-alone drug plans can vary significantly in terms of premiums, deductibles, cost sharing, provider and/or pharmacy networks, and drugs covered, among other plan features. Comparing all of these factors simultaneously is the best way to maximize value and lower costs, but it is also time consuming and challenging, especially for beneficiaries with cognitive impairments or serious health needs.
Our finding that a majority of MA-PD and PDP enrollees stay in the same plan during the annual open enrollment period may not be a concern, but it raises a question as to whether “stickiness” leads to avoidable costs, or unrealized benefits, for a large share of the Medicare population. The finding that nearly half of all Medicare beneficiaries say they never or rarely compare plans suggests that many beneficiaries may be unaware of important differences across plans that could have a significant impact on their coverage, costs, and, in the case of Medicare Advantage plans, access to certain providers. This is not surprising given the sheer number of Medicare private plans now available and the many ways in which they differ. Given that some presidential candidates and policymakers are discussing proposals to build on Medicare and the marketplace model or to broaden the role of private plans in Medicare, understanding the barriers that people on Medicare experience will continue to be important for policy discussions.
Recent Changes Add Complexity to Medicare’s Fall Open Enrollment Period
Medicare’s Fall Open Enrollment Period (OEP) is a busy time for beneficiaries and those who help them evaluate their health care and prescription drug coverage options.
From October 15 to December 7 each year, people with Medicare can make changes to their coverage, such as switching Part D prescription drug plans, or switching between Original Medicare and Medicare Advantage.
This annual decision-making process can be complex, and several changes this year are making it even more so.
Medicare Part D: A First Look at Prescription Drug Plans in 2020
During the Medicare open enrollment period from October 15 to December 7 each year, beneficiaries can enroll in a plan that provides Part D drug coverage, either a stand-alone prescription drug plan (PDP) as a supplement to traditional Medicare, or a Medicare Advantage prescription drug plan (MA-PD), which covers all Medicare benefits, including drugs. Among the 45 million Part D enrollees in 2019, 20.6 million (46%) are in PDPs (excluding employer-only group PDPs). This issue brief provides an overview of PDPs that will be available in 2020 and highlights key changes from prior years.
The average Medicare beneficiary will have a choice of 28 PDPs in 2020, one more PDP option than in 2019, and six more than in 2017, a 29% increase. A total of 948 PDPs will be offered in the 34 PDP regions in 2020 (plus another 11 PDPs in the territories), an increase of 202 PDPs since 2017.
PDP premiums will vary widely across plans in 2020, as in previous years (Figure 1). Among the 20 PDPs available nationwide, average premiums will range sixfold from a low of $13 per month for Humana Walmart Value Rx Plan to a high of $83 per month for Express Scripts Medicare Choice.
Two-thirds of Part D enrollees without low-income subsidies (9.0 million enrollees) will see their monthly premium increase in 2020 if they stay in their same plan, while one-third (4.3 million) face premium decreases. As an example, the 1.9 million enrollees without low-income subsidies in the Humana Walmart Rx Plan, the third most popular PDP in 2019, will see their monthly premium double in 2020, from $28 to $57, unless they switch plans. This is due to plan changes and consolidations, with Humana consolidating two of its PDPs (Humana Walmart Rx and Humana Enhanced) into one PDP for 2020 and renaming it Humana Premier Rx, with a $57 monthly premium.
The estimated national average monthly PDP premium for 2020 is projected to increase by 7% to $42.05, weighted by September 2019 enrollment. The actual average premium in 2020 may be lower if current enrollees switch to, and new enrollees choose, lower-premium plans during open enrollment.
In 2020, all PDPs will have a benefit design with five or six tiers for covered generic, brand-name, and specialty drugs, and cost sharing other than the standard 25% coinsurance, similar to 2019. More than eight in 10 PDPs (86%) will charge a deductible, with most PDPs charging the standard deductible of $435 in 2020.
Among all PDPs, median cost sharing is $0 for preferred generics and just $3 for generics, but $42 for preferred brands and 38% coinsurance for non-preferred drugs (the maximum allowed is 50%), plus 25% for specialty drugs (the maximum allowed is 33%).
Medicare beneficiaries receiving the Low-Income Subsidy (LIS) will have a choice of seven premium-free PDPs in 2020, on average, one more than in 2019. In 2020, nearly 20% of all LIS PDP enrollees who are eligible for premium-free Part D coverage (1.3 million LIS enrollees) will pay Part D premiums averaging $18 per month unless they switch or are reassigned by CMS to premium-free plans.
YourMedicare Enrollment Center Updates - All Plans Now Available
YourMedicare Enrollment Center has been updated to reflect all CMS approved Medicare Advantage and Part D plans*. You will now have full transparency on the markets you serve. This update will automatically be reflected next time you log into the portal and will display the ‘All Plans’ view as the default view on the agent’s results page.
With our all-inclusive platform, you can sell Medicare plans on your terms. Offer top carriers, receive the best commissions, all on a vested contract with industry-recognized service and support.
The YourMedicare Enrollment Center™ offers:
Access to quoting and enrollment for the industry's leading Medicare Advantage and Part D carriers. All CMS compliant.
Ability to store your client prescription drug details.
Electronic Scope of Appointment.
Multiple signing options including a new text to enroll feature.
Dashboard to manage your submissions and check status.
Training video library with instructional guides.
Freedom to sell when and where you want.
This comprehensive tool simplifies the sales process with multi-carrier shopping and enrollment platforms wrapped into a single online experience. And best of all, this platform is available at no cost to PSM agents.
Some changes are in store for Part D in 2020 and policymakers are contemplating even more. The Kaiser Family Foundation (KFF), a nonpartisan nonprofit focused on national health issues, recently outlined what the program will look like next year under current law, and under recent legislative and administrative proposals.
Lawmakers in the U.S. House of Representatives are continuing work on their drug pricing bill, H.R. 3, with hopes of holding a vote later this month. Unveiled in September, H.R. 3 includes a number of provisions that would improve prescription drug access and affordability for people with Medicare. Among the bill’s critical reforms are those allowing Medicare to negotiate drug prices; the imposition of inflationary rebates on certain drugs in Parts B and D; and a restructuring of the Part D benefit that would cap out-of-pocket costs, reduce the federal government’s liability, and better align pricing incentives.
A preliminary analysis from the nonpartisan Congressional Budget Office (CBO) estimates H.R. 3’s negotiation provisions alone would save $345 billion over seven years.
U.S. News Announces the 2020 Best Insurance Companies for Medicare
Best Insurance Companies for Medicare Advantage 2020
U.S. News analyzed insurance companies’ Medicare Advantage offerings in each state based on their 2020 CMS star ratings.
MEDICARE-ELIGIBLE beneficiaries can enroll in a Medicare Advantage plan from a private insurance company. U.S. News provides a tool for Medicare-eligible beneficiaries to find the right Medicare plans for their needs. All plan information and star ratings come directly from the Center for Medicare and Medicaid Services (CMS) at Medicare.gov.
U.S. News analyzed insurance companies’ offerings in each state based on their 2020 CMS star ratings, and below provides a list of U.S. News & World Report's Best Insurance Companies for Medicare Advantage. A Best Insurance Company for Medicare Advantage is defined as a company whose plans were all rated as at least three out of five stars by CMS and whose plans have an average rating of 4.5 or more stars within the state. Read more about our methodology.
Other insurance companies have 5-star rated plans. Anyone researching Medicare Advantage plans should compare individual plans offered in their service area.
Best Insurance Companies for Medicare Part D 2020
MEDICARE-ELIGIBLE beneficiaries can enroll in a Medicare Part D Prescription Drug plan from a private insurance company. U.S. News provides a tool for Medicare-eligible beneficiaries to find the right Medicare plans for their needs. All plan information and star ratings come directly from the Center for Medicare and Medicaid Services (CMS) at Medicare.gov.