Produced in conjunction with the Population Aging Research Center at the University of Pennsylvania.

Medicare Advantage is increasingly popular. Enrollment in these plans, which are offered by private insurers as an all-in-one alternative to federal Medicare parts A, B, and D, more than doubled in the past decade, going from 12 million in 2011 to 26 million today. Black, Asian, and Hispanic enrollees sign up at higher rates than white enrollees — but members of racial and ethnic minority groups tend to be in plans with lower quality ratings.

Is this disparity because of differences in plan costs, enrollee awareness of plan ratings, or other factors? A new paper by LDI Senior Fellow Norma B. Coe and LDI Executive Director Rachel M. Werner, with Sungchul Park from Drexel University, sheds some light on this question.

Norma B. Coe, PhD

The researchers analyzed Medicare Advantage quality ratings from the Centers for Medicare and Medicaid Services (CMS). CMS rates Medicare Advantage plans from one to five stars based on quality measures such as preventive care, appropriate prescribing, and member satisfaction, ratings which are designed to help beneficiaries choose high-quality plans. Analysis of the 2016 Medicare Advantage records on more than 8.5 million enrollees showed that, compared to white individuals, the plans offered to enrollees in racial and ethnic minority groups generally had lower quality ratings and the beneficiaries enrolled in the low-rated plans more often than white enrollees.

What did the researchers find when they analyzed only the Black enrollees who had access to the highest-rated plans? That disparity reversed. When Black individuals had the option, they chose five-star plans more often than white enrollees — 3.2 percentage points more often. 

Rachel M. Werner, MD, PhD

The structural barriers to high-quality plans for Black Americans may result from the design of the Medicare Advantage program, which may de-incentivize insurers from offering plans in areas with a large number of racial and ethnic minority group residents. The current payment adjustment used by Medicare Advantage tends to overpay plans for healthier enrollees and underpay for complex enrollees, the researchers note. Decades of structural racism and social disadvantage often result in increased clinical complexity among racial and ethnic minority groups. Because payments to Medicare Advantage plans do not account for race or ethnicity as a social risk factor, this may lead to systematic underpayments for racial and ethnic minority enrollees, providing little incentive to offer health plans in communities where a large number of racial and ethnic minority group members reside. Having more enrollees with poorer health also affects Medicare Advantage performance scores, adding to insurers’ reasons to restrict access in areas where residents might need more care. In fact, Medicare Advantage performance scores are known to decrease as the proportion of enrollees with complex health and social needs increases. Because performance is linked to payment bonuses, decreases in performance scores worsen finances for insurers.

CMS can decrease the structural racism currently built into Medicare Advantage by modifying its design. They can encourage insurers to offer five-star plans in areas that do not currently have them with premium subsidies, rebates, and tax exemptions, and also by including more robust payment adjustments for members’ health and social risks. Adjusting quality ratings for social factors could increase the incentives to provide five-star plans in areas that lack them, ensuring that racial and ethnic minority enrollees have equal access to high-quality health plans.


The study, Racial and Ethnic Disparities in Access to and Enrollment in High-Quality Medicare Advantage Plans, was published in Health Services Research on March 27, 2022. Authors are Sungchul Park, Rachel M. Werner, and Norma B. Coe.


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