New research shows significant differences between those who choose Medicare Advantage plans and those who choose traditional Medicare fee-for-service plans, including different socioeconomic backgrounds.
The average income of a traditional Medicare enrollee is $85,085, versus $76,720 for a Medicare Advantage enrollee, according to a whitepaper co-authored by Harvard Medical School and software solutions company Inovalon.
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The analysis included a study sample of 180,087 individuals enrolled in traditional Medicare and 25,470 individuals enrolled in Medicare Advantage. It relied on three data sources: Inovalon’s dataset that covers 30% of the privately insured population in the U.S.; a dataset from the Centers for Medicare and Medicaid Services that supplies medical and pharmacy claims for traditional Medicare beneficiaries and enrollment data on traditional Medicare and Medicare Advantage beneficiaries; and social determinants of health data from consumer intelligence company Acxiom.
The researchers discovered that 35.5% of traditional Medicare beneficiaries live in a neighborhood that has an average income of more than $100,000, compared to just 23.8% of Medicare Advantage enrollees. On average, Medicare Advantage beneficiaries’ net worth is only 74.2% of the typical traditional Medicare beneficiary.
In addition, Medicare Advantage enrollees are twice as likely as traditional Medicare enrollees to be non-White, the researchers found. Of traditional Medicare beneficiaries, 95.6% are White, 2.5% are Black, 0.4% are Hispanic and 1.5% are Asian. Of Medicare Advantage beneficiaries, 90.6% are White, 4.8% are Black, 1.9% are Hispanic and 2.6% are Asian.
Medicare Advantage beneficiaries are also much more likely to have been in a Health Maintenance Organization (HMO) plan prior to Medicare eligibility than traditional Medicare enrollees. About 45.8% of Medicare Advantage beneficiaries were enrolled in an HMO plan before Medicare eligibility, compared to 27.8% of traditional Medicare enrollees. HMO plans typically have lower monthly premiums than Preferred Provider Organization plans.
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Why do people from more socioeconomically disadvantaged backgrounds join Medicare Advantage plans? Traditional Medicare provides less support than Medicare Advantage does, declared Christie Teigland, PhD, vice president of research science and advanced analytics at Inovalon.
“Fee-for-service has no active care management,” Teigland said in an interview. “Beneficiaries are pretty much on their own. … This, of course, is harder on socioeconomically disadvantaged populations because they might need more help in understanding their discharge instructions and making sure they’re following that discharge plan. Medicare Advantage follows up with them and makes sure that they get back to see the doctor after their discharge, that they’re actually understanding what their treatment plan looks like and why it’s important to take their medications or they might need transportation to the doctor. Fee-for-service does none of that.”
Boris Vabson, health economist and researcher at Harvard Medical School, added that Medicare Advantage is more “financially generous” than fee-for-service in terms of co-pays, coinsurance and premiums.
This is the first study to examine data on Medicare beneficiaries prior to them becoming eligible, the researchers claimed. The information is important for insurers so they can have a better understanding of their members’ needs.
“I think this, on the whole, can give health plans a much better idea of what the different customer segments look like, … what are the growth opportunities for them, and really better tailor their marketing and product efforts to be able to serve all the different customer segments,” Vabson said.
This was the first of a series of studies. Future studies will look at areas like differences in healthcare utilization between Medicare Advantage and traditional Medicare enrollees, as well as differences in quality, according to Vabson.
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