A recent analysis of Medicare data showed that the sickest (and most costly) members of Medicare Advantage (MA) plans were dropping out of their privately run MA insurance plans for traditional Medicare instead.
When reporters for The Wall Street Journal analyzed Medicare data, they found a pattern that was costing taxpayers billions. The pattern showed that the sickest Medicare Advantage patients were canceling their coverage just as their health needs and the cost of that care rose, the article showed.
Perhaps more disturbingly, many members of Medicare Advantage plans switched after they encountered problems getting the costs of their care covered, the article showed, The journal published the article, “The Sickest Patients Are Fleeing Private Medicare Plans — Costing Taxpayers Billions,” on Nov. 11, 2024.
In the last year of their lives, when Medicare Advantage members were likely to switch to traditional Medicare, they shifted the cost of their care away from the health insurers and to the federal government, reporters Anna Wilde Mathews, Christopher Weaver and Tom McGinty explained.
As a result, MA insurers collectively avoided $10 billion in medical costs that the dropouts incurred from 2016 to 2022, the reporters’ analysis showed.
“If those beneficiaries had stayed in their plans, the government would have paid the insurers about $3.5 billion in premiums, meaning the companies netted more than $6 billion in savings during that period,” they added.
The Medicare Advantage plans that health insurers sell to old and disabled Medicare members are supposed to offer the same benefits those members would get from traditional Medicare, the reporters explained. MA plans are attractive to seniors because they limit out-of-pocket costs and often provide extra benefits such as dental care and gym memberships, they added.
“As recipients get sicker, though, they may have more difficulty accessing services than people with traditional Medicare,” Mathews, Weaver and McGinty wrote. “That’s because the insurers actively manage the care, including requiring patients to get approval for certain services and limiting which hospitals and doctors patients can use.”
From 2016 to 2022, seniors in the final year of their lives left Medicare Advantage plans for traditional Medicare at double the rate of other enrollees, the WSJ analysis showed. “Those private-plan dropouts — 300,075 during that time span — often had long hospital and nursing-home stays after they left, running up large bills that taxpayers, not their former insurers, had to pay,” the reporters explained.
In the same period (from 2016 to 2022), the seniors who left their Medicare Advantage plans cost the federal government an average of $218 a day, Mathews, Weaver and McGinty wrote. “That is more than seven times the cost of a typical Medicare recipient, and about twice the cost of other recipients in the last year of their lives,” they added. The WSJ’s analysis excluded hospice expenses, which traditional Medicare typically covers for all patients, they noted.
Researchers from KFF had more detail on why Medicare Advantage members switch to traditional Medicare in this report, “Medicare Spending was 27% More for People who Disenrolled from Medicare Advantage than for Similar People in Traditional Medicare.”
