Medicare Advantage in 2022


Emily Boerger


Medicare-directed managed care has come a long way in four decades. What began in 1985 as a limited option available only in select markets—it was initially known as “HMO risk contracting”—has evolved into Medicare Advantage (MA), which is a major book of business for much of the private health insurance industry. Three recent reports, along with data supplied by the Medicare trustees, provide interesting details on MA trends, the state of the industry in 2022, and the outlook for the coming years.


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  • MA enrollment growth has been especially rapid since 2019. According to an analysis from The Chartis Group, MA penetration grew from 37 percent in 2019 to 45 percent in 2022, with much of the growth fueled by a drop in enrollment in the traditional fee-for-service (FFS) program (many new program enrollees also choose MA over FFS). There are 2.6 million fewer FFS enrollees in 2022 compared to 2019.
  • The 2003 Medicare Modernization Act recast Medicare+Choice as MA, and revamped its payment system. The result was accelerated enrollment growth that the Affordable Care Act (ACA), enacted in 2010, attempted to slow with a partial rollback. Somewhat surprisingly, MA plans continued to add new enrollment after the ACA, even with the cuts.
  • A survey of 2022 MA offerings by researchers at the Kaiser Family Foundation points to a robust and competitive market. The average Medicare beneficiary can choose from 39 different MA plans, up from 19 in 2011. Nationwide, insurers are offering a total of 3,834 different MA options, up from 1,824 in 2011. Only 0.3 percent of all Medicare beneficiaries do not have access to an MA offering. Twenty-five percent of Medicare beneficiaries have access to 50 or more MA plans.
  • The MA market is dominated by HMOs and PPOs, which together account for 96 percent of all the plans offered in 2022. The private FFS option in MA has been shedding enrollment since 2010.
  • Beneficiaries enroll in MA because they often offer less expensive supplemental and drug coverage than the alternative options. In 2022, 89 percent of MA plan offerings include part D prescription drug coverage (called MA-PD), and 98 percent of all Medicare beneficiaries have the option to enroll in MA-PD plans that charge no premium beyond what is required for Medicare part B ($170.10 per month). A study by Mark Farrah Associates indicates that 82 percent of all MA offerings have premiums below $50 per month. Further, all MA plans are required by regulation to include an out-of-pocket limit on annual costs for services covered by parts A and B. The absence of catastrophic protection in FFS is a major reason many beneficiaries purchase Medigap policies.
  • MA plans usually offer supplemental coverage beyond what is required by the Medicare statute. According to the Kaiser survey, 98 percent of MA plans offer eye exams and eyeglasses, 95 percent cover fitness services, and 94 percent provide some level of dental care. The scope and range of these supplemental benefits vary greatly.
  • The MA industry is an attractive market opportunity. In 2022, 20 new firms began offering MA plans. However, overall enrollment remains concentrated in a small number of large national insurers. According to the Chartis analysis, United Healthcare, Humana, and CVS-Aetna account for 56 percent of all MA enrollees. Overall, for-profit insurers have 72 percent of the MA market, with Blues plans accounting for 10 percent and not-for-profits the remaining 18 percent. In recent years, for-profit insurers have grown more rapidly than the Blues and not-for-profit plans (a category which includes Kaiser Permanente).
  • MA penetration is higher in some regions than others. According to Chartis, there are eleven states with MA penetration above 50 percent, including Florida, Michigan, Oregon, Minnesota, and Wisconsin. Among the states with the lowest MA penetration are Alaska, Wyoming, Montana, and Vermont.
  • MA plans targeted at beneficiaries with special needs — MA SNPs – have grown substantially in recent years. These are plans that are allowed by law to limit enrollment based on the care needs of the beneficiary population, or their eligibility for both Medicare and Medicaid (the “dual eligibles”). In 2022, there are 1,156 MA SNPs, up from 975 in 2021.
  • Chartis is projecting strong MA enrollment in the coming years, with nationwide penetration exceeding 50 percent by 2025. The Medicare trustees are forecasting a more modest pace of continued growth, with MA penetration reaching 49 percent in 2030.
  • Critics of MA contend the enrollment boom has been fueled by excessive payments tied to risk-adjustment upcoding and a quality bonus pool that hands out rewards but not penalties (a recent Health Affairs post provides a helpful summary of the various arguments, pro and con, around MA payments). The Medicare Payment Advisory Commission (MedPAC) estimates the overall overpayment for MA at 4 percent of FFS. However, the agency also states that MA plans are more efficient than FFS, with average expenses of just 87 percent of FFS for Medicare-covered services. The savings is used to pay for supplemental benefits instead of reducing costs for the program.


MA’s remarkable growth over the past two decades has increasingly registered in the political process too. In recent weeks, a bipartisan group of 63 Senators signed a letter to the Centers for Medicare and Medicaid Services (CMS) urging stability in MA payments for 2023. They are responding to the popularity of MA, and especially the supplemental benefits the plans offer, among their constituents.

At this point, there is no turning back the clock. Both parties recognize that MA plans have significant potential to bring innovation and efficiency to the provision of medical services to the nation’s elderly. The next step should be to improve the payment system so that the competition among MA plans, and between MA and FFS, is fair and delivers savings to taxpayers as well as the program’s beneficiaries.

James C. Capretta is a columnist for State of Reform and a senior fellow at the American Enterprise Institute.