April 2, 2025
By Carrie Graham and Madeline McBride
A number of conservative policymakers and think tanks have pushed to make “privatizing Medicare” part of the current Trump administration’s healthcare agenda. One path toward more privatization is to “default” Medicare beneficiaries into private managed care plans called Medicare Advantage (MA). This would mean that instead of being in traditional Medicare and offered a choice, they would instead be auto enrolled in an MA plan, or forced to choose an MA plan at the time they first become eligible for Medicare. If pursued, this would likely drastically decrease the number of beneficiaries in traditional Medicare, and increase the number in private MA plans. Proposals to default beneficiaries into MA have provided little clarity about how such a change would be implemented, nor the potential consequences it would have on federal spending and access to care for Medicare beneficiaries. In this MPIBlog, Medicare beneficiaries’ current enrollment options are reviewed and several barriers and unanswered questions about defaulting beneficiaries into MA are examined.
Current Medicare Choices: Traditional Medicare vs. Medicare Advantage
Currently, new Medicare beneficiaries are “defaulted” into traditional Medicare, but they can choose to receive their Medicare benefits through Medicare Advantage plans which are private managed care organizations. Some of the most common are United HealthGroup, Humana, Cigna, and CVS Health. Currently, over half of the over 60 million Medicare beneficiaries have enrolled in a private MA plan—representing approximately 32.8 million MA enrollees. There are several reasons why beneficiaries may prefer either traditional Medicare or MA.
- Beneficiaries who keep traditional Medicare like the flexibility. They can go to any Medicare certified provider in the country and aren’t limited by a provider network. Also, the care, tests and treatments prescribed by their doctors are rarely subject to prior authorizations or denials as they are in MA. However, traditional Medicare can be expensive because there is no limit out-of-pocket expenses and provider visits and hospital stays require copayments. Thus, 89% of traditional Medicare beneficiaries secure some sort of supplemental coverage (through retiree benefits, Medicaid, or purchasing a Medigap plan) that caps spending and covers copayments.
- Beneficiaries typically enroll in MA plans because they can be more affordable. Unlike traditional Medicare, MA plans limit out-of-pocket expenses through annual caps. Beneficiaries are also attracted to the extra supplemental benefits advertised by MA plans such as dental, vision, and hearing services which are not covered in traditional Medicare. On the other hand, MA plans typically limit enrollees to specific provider networks and can require prior authorization and deny care and services that would be covered in traditional Medicare.
Barriers to “Privatizing” Medicare” through Default Enrollment into MA
Privatizing Medicare usually refers to proposals to default Medicare beneficiaries into MA plans. In Project 2025, the conservative Heritage Foundation elevated Medicare privatization as a policy priority, proposing that when individuals become eligible for Medicare, MA would be the default enrollment option. The promotion of Medicare privatization is echoed in similar proposals by the Republican Study Committee and the Paragon Health Institute. The latter has posited a forced choice between traditional Medicare and MA for all beneficiaries at the time they first become eligible for Medicare. In his 2020 campaign for the U.S. Senate, Dr. Mehmet Oz, the current nominee to lead the Centers for Medicare & Medicaid Services (CMS), co-authored a piece advocating for “Medicare Advantage for All”, a policy that would leverage private Medicare Advantage (MA) plans to provide health care for more Americans. Potential barriers to implementation of default enrollment are detailed below.
Choice of Medicare program is important to Americans. When the MA program was first implemented, there were bipartisan protections put in place to ensure that Medicare beneficiaries would not be forced into private managed care plans. This was codified into law through section 1851(c) of the Social Security Act. Thus, any change to this protection would require an act of Congress.
Increased enrollment in the Medicare Advantage program would increase federal spending. While many people assume that using managed care will automatically save money, this is not the case with Medicare Advantage. The Medicare Payment Advisory Commission and other researchers estimate that the federal government pays approximately 22% more for MA enrollees than for similar beneficiaries in traditional Medicare, constituting approximately $83 billion in extra spending in 2024. Thus, any increase to MA enrollment would likely result in increased federal spending and could threaten the sustainability of the program.
Requiring beneficiaries to choose an MA plan would require a major effort to increase beneficiaries’ access to accurate and comprehensible information. It has been well documented that it can be difficult for people to make an informed choice between traditional Medicare and MA, and between various MA plans. In 2024, beneficiaries had an average of 42 different MA plans from 8 different companies to choose from, depending on where they live. Even the most basic information that beneficiaries need to compare plans (e.g. whether their doctors are in network, out-of-pocket fees, and what supplemental benefits they qualify for) can be difficult to access. For example, MA provider directories available online are often not up to date. In fact, one CMS study revealed that an average of 50 percent of providers listed as available in MA directories had inaccurate locations, wrong phone numbers, or were not actually accepting new patients– making it difficult for beneficiaries to use this information to make an informed choice of MA plan.
MA plans have also been criticized for not being transparent about the supplemental benefits they offer. While many MA plans advertise coverage of extra supplemental benefits like dental, vision, and hearing services, these are not standardized and it can be difficult to assess the true scope of that coverage (e.g. full dental or partial coverage for cleanings only). Plans also sometimes provide special supplemental benefits for the chronically ill (SSBCI), that include benefits that are not primarily health-related like transportation, groceries, and gym memberships. The fact that enrollees must have a specific chronic illness to be eligible for these benefits is not always included in the advertising and can be misleading to those who buy the plan assuming they will be eligible.
Paid Brokers can give false or misleading guidance to steer beneficiaries into MA plans. Defaulting beneficiaries into MA plans or forcing a choice would require significantly more assistance for beneficiaries and their families. While there are several unbiased, free sources of help for beneficiaries to compare plan costs and services, (e.g. CMS Plan Compare website and State Health Information Program (SHIP) counselors), beneficiaries are most likely to get their information from paid brokers (sometimes called “marketing middlemen”) who are paid by MA plans to promote enrollment. Brokers have been criticized for aggressive marketing tactics and providing false or incomplete information, as well as for enrolling beneficiaries in MA plans without their consent.
Concerns about inadequate access to care in Medicare Advantage: Researchers, advocates, lawmakers, and oversight agencies have raised concerns about access to care for MA enrollees. Some MA plans have been criticized for: 1) requiring prior authorization for services that meet Medicare coverage criteria, 2) using artificial intelligence to issue blanket denials for certain covered services, 3) inappropriate denials of medically necessary care, 4) having inadequate provider networks, especially in rural areas where there are provider shortages, and 5) providing poor access to certain services such as post-acute care/rehabilitation and mental health care. All of these factors could mean that beneficiaries in MA do not get the same benefits as those in traditional Medicare.
Unanswered Questions about Default Enrollment into Medicare Advantage
Many questions would need to be addressed before considering defaulting Medicare beneficiaries into private managed care plans. A few of these are listed below.
- Would traditional Medicare still be an option for Americans? If there were a plan to default all 33 million existing traditional Medicare beneficiaries into MA, this would effectively eliminate traditional Medicare as a choice. Alternatively, if only newly eligible Medicare beneficiaries are defaulted in MA, it would slowly decrease the number of beneficiaries in traditional Medicare over time, having major implications for the sustainability and parity of the program. If traditional Medicare is going to be maintained as a choice, there would need to be changes to the program to make it competitive with MA, such as implementing caps on out-of-pocket spending, and offering supplemental benefits like dental, vision, and hearing on para with MA.
- How would it be determined which MA plan to default beneficiaries into? If CMS defaults beneficiaries into MA plans, there would need to be a massive effort on the part of CMS to match (auto-enroll) beneficiaries to one MA plan in their region. For example, some Medicaid plans have attempted this with variable success in the past by using fee-for-service data to match beneficiaries with managed care plans that their primary care provider is participating in. This approach was less successful for those without a primary care doctors and for older adults with complex conditions who rely on many specialty providers. It would also be even more difficult for newly eligible Medicare beneficiaries who have no history of Medicare FFS use.
- How would important information for beneficiaries be made more accessible in order for them to select a plan? If CMS were to force a choice between traditional Medicare and MA at the time of enrollment, MA plans would need to work quickly to provide information including accurate provider directories, descriptions of eligibility and scope of supplemental benefits, and prior authorization metrics so beneficiaries would have the information and tools they need to make an informed choice.
- How would MA plans prepare for this large increase in the number of enrollees? If default enrollment were implemented, MA plans would need to quickly expand their internal operations and increase the number of providers in their networks to adequately to meet the needs of more enrollees. This would be especially difficult in rural areas where there are provider shortages.
- How would the federal budget accommodate the increased cost of MA? Given that the federal government spends about 22% more on MA enrollees, policies that increase MA enrollment would likely drive up federal spending. Plans to reduce payments to MA could have an effect on the benefits provided to beneficiaries, providers willingness to participate, and/or the MA plans’ revenue.
Any proposal to promote the privatization of Medicare that involves defaulting beneficiaries into private managed care plans or forcing a choice upon enrollment would raise major challenges for ensuring that beneficiaries’ access to high quality care is maintained. Importantly, policymakers and plans would need to ensure that increased MA enrollment wouldn’t increase federal spending in a way that destabilizes the fiscal integrity of the program or the benefits available to beneficiaries. Finally, policymakers would need to carefully consider whether default enrollment would undermine the principle of Medicare choice that is so highly valued by Americans.