Medicare Advantage Enrollment Drops in Seven States

As more baby boomers retire, Medicare and Medicare Advantage enrollment is expected to skyrocket.

Both the traditional and privatized version of the senior health insurance have gained many more patients as seniors look for health care coverage in their golden years.

In seven states, the opposite is happening for Medicare Advantage, though. Enrollment is down in Alaska, Colorado, Georgia, Hawaii, Iowa, Louisiana and Michigan.

Medicare Advantage can often provide lower out-of-pocket costs but limits patients in terms of providers and treatment options. It can also include add-on plans like dental and vision.

The extent of the Medicare enrollment drop varies across the states. Most stayed at roughly the same percentage for the number of people enrolled in Medicare Advantage who are eligible.

Some states, like Colorado, Georgia and Hawaii, see low to mid-50 percent enrollment, while Michigan sees nearly 60 percent enrolled. Iowa, meanwhile, has roughly only 35 percent of its Medicare eligible population with the coverage.

Still, across the country, Medicare Advantage plans, which are the privatized version of Medicare, are rapidly gaining popularity and now make up more than half the plans that Medicare beneficiaries are enrolled in.

Michael Ryan, a finance expert and the founder and CEO of michaelryanmoney.com, said this is mostly concentrated in certain states as more rural areas see fewer Medicare Advantage plans.

"While MA plans have gone mainstream here in places like Florida or California, traditional fee-for-service Medicare is still the dominant coverage in many parts of the country," Ryan told Newsweek.

He said it comes down to a mix of demographics, insurance markets and personal preferences.

"Older, sicker and lower-income beneficiaries may be sticking with traditional Medicare," Ryan said. "And in rural areas, there are simply fewer MA plan choices available."

It's likely Medicare Advantage growth will continue to outpace traditional Medicare as more and more employers shift retirees to private plans, but the split could still be based on geographic lines.

Understanding the difference between the two coverage options is crucial for seniors looking to pick a health plan that suits them best. Traditional Medicare gives you an unlimited choice of providers, but you might be restricted in your Medicare Advantage plan for your doctor and treatment options.

On the other hand, Medicare Advantage often has lower out-of-pocket costs and add-ons like dental and vision.

"Medicare isn't shrinking," Ryan said. "It's evolving rapidly as baby boomers join the system in huge numbers. But the pace and shape of that change will look very different across the country based on local market conditions and personal preferences."

Why Are People Leaving Medicare?

There are many factors for why Medicare and Medicare Advantage enrollment could dwindle.

For some states, declining senior populations make it natural for Medicare enrollments to come down, but in other states, seniors have been purposefully removed due to coverage requirements or cuts.

In Texas, 350 seniors were removed from the state's Medicare Savings Program after the state made an error. It led to seniors losing up to $200 in their monthly Social Security checks.

State errors like this occurred after the federal government ended its coronavirus-era rules that protected patients from losing their health insurance.

But nationally, there's been significant cuts underway to Medicare Advantage plans, which could lead to more challenges for seniors navigating coverage within the next year.

Major health insurer Humana announced it would be cutting its Medicare Advantage plans by 2025, and about 6 million Americans could be affected.

"We acknowledge that the industry is experiencing a dynamic and challenging time that we must navigate," CEO Bruce Broussard told investment analysts during a quarterly call Wednesday.

Chris Fong, the CEO of Smile Insurance Group, said many of the seniors impacted live in larger cities, and the extra benefits like dental and vision care will no longer be options.

"These benefits are historically the benefits that are adjusted when a plan is expecting to receive less from Medicare which previously would usually come from a lower star rating," Fong told Newsweek.

And Humana is just one of many looking to take away benefits in an effort to boost profits.

Mutual of Omaha said it would stop offering standalone Medicare prescription drug plans due to the higher costs, while UnitedHealth has foreshadowed it could be next as it struggles to keep pace with lower Medicare Advantage revenues.

"Our strategy continues to focus on providing as much stability as possible in the reduced funding environment," UnitedHealth CEO Andrew Witty said during last month's investor call.