A new analysis by the Kaiser Family Foundation (KFF) reveals that Medicare spending is higher for beneficiaries who switch from Medicare Advantage (MA) to traditional Medicare compared to similar beneficiaries who have continuously been enrolled in traditional Medicare.

These beneficiaries cost Medicare an average of 27% more, according to the analysis, which examined health costs in traditional Medicare for both groups in the year following the switch, after adjusting for differences in health status and other characteristics. This amounts to an average difference of $2,585 in Medicare spending per person between the two groups in 2022.

The higher Medicare spending among beneficiaries who disenrolled from MA, compared to similar beneficiaries in traditional Medicare, was primarily due to skilled nursing facilities, followed by outpatient and inpatient hospital spending. This spending exhibited some variation based on chronic conditions and other beneficiary characteristics.

In 2024, more than half of all eligible Medicare beneficiaries were enrolled in an MA plan. Other research has found that individuals who use a greater number of health care services are less likely to enroll in one of the private plans and more likely to choose traditional Medicare.

The higher Medicare spending among individuals who disenrolled from MA for traditional Medicare raises several questions, including whether such switchers were unable to obtain the medical care they felt they needed while enrolled in an MA plan, whether more MA enrollees would make the switch if individuals with pre-existing conditions did not face barriers to purchasing Medicare supplemental insurance, and whether the disenrollments reduce costs, increase profits for MA insurers, and drive up Medicare spending.

The analysis also examines differences in Medicare spending between switchers and those who use traditional Medicare, which is continuously covered by health conditions, age, race and ethnicity, and dual-eligibility status.