United States Medicare: 65 Year Olds Aren't Signing Up for Medicare Advantage As Much As CW Said

There is an interesting enrollment phenomenon in process in United States Medicare that further confirms the trend in popularity of public Part C Medicare Advantage health plans, which are the Federal government's public Medicare supplement option to private retiree insurance and Medigap plans.

The conventional wisdom for the last five years or so has been that the explosion in Part C popularity since 2006 (see image from the June 2014 MedPAC Data Book¹),  has come from new Medicare enrollees not eligible for retiree health insurance (particularly baby boomers since 2011). Such new enrollees, typically 65 years old, have grown into Medicare as members of health maintenance organizations (HMOs), now called accountable care organizations by Obama administration, and preferred provider organizations (PPOs). Almost all public Part C Medicare Advantage health plans are HMOs and PPOs.

Therefore, the theory goes, these new Medicare enrollees signed up for Part C in droves when first given the option to sign up for Medicare because they understood both the benefits and limitations of Part C's managed but networked insurance and they were less concerned about the limitations of such plans than their parents and grandparents.

It turns out, according to a presentation at Medpac September 2014 meeting², there is some truth to that theory but it does not tell the whole story. It turns out 65 year olds are not signing up for Medicare Advantage in droves, although they are signing up. To a greater extent, it's 67 year olds that have been on Original Medicare A or B or A and B for a few years. And 70 year olds, the bably boomers' older brothers and sisters. In other words, the real surge is coming from people who have tried private supplmental insurance for a few years and prefer the public option of Part C Medicare Advantage. To a lesser extent even beneficiaries older than 75 are switching although the old prejudices against HMOs from the 1980s die hard among this group and most likely any growth in this cohort is due to people on Part C special needs plans.

This information is befuddling the goo goos that want to run the nanny state and put all 50,000,000 of us and growing into the same one-size-fits-all crappy insurance plan all across America. But the reason is simple and the fact that the goos goos are befuddled just illustrates how out of touch they are with reality. At least until Medicare is reformed and made totally consistent, Part C is a better supplemental choice particularly for the poor.

¹Which in typical government fashion is always based on years-old data; the number actually increased to nearer 16,000,000 in 2014

²Look for presentation on Medicare Advantage demographics made at the September 12, 2014 meeting