The Medicare Advantage (MA) program has grown rapidly; 54% of beneficiaries now select MA insurance plans rather than enrolling in traditional Medicare. Beneficiaries may find MA plans attractive because they typically offer low or zero premium options, prescription drug coverage, limits on out-of-pocket spending, and supplemental benefits such as vision and dental care. In exchange, beneficiaries are limited to clinicians and hospitals within their plan’s network—with financial penalties for care outside the network—and their care may be subject to prior authorization, delays, and denials. Many beneficiaries view these trade-offs as worthwhile, at least while they are healthy. But do they really know what they are choosing?

When they become eligible for Medicare, beneficiaries must choose to enroll in MA or traditional Medicare; those who choose traditional Medicare usually also select a Medigap plan and a Part D prescription drug plan, both of which, like MA plans, are offered by private insurers and help cover out-of-pocket costs. Many beneficiaries are unaware of 2 key features of MA enrollment that may steer them into the program and keep them there for life. First, health insurers give agents and brokers from whom many beneficiaries seek assistance strong incentives to steer beneficiaries to MA. Second, it is very difficult for most beneficiaries, once enrolled in MA, to switch to traditional Medicare.

Agents are employed by individual health insurers; brokers work independently. (For brevity, referred to herein as “brokers.”) MA plans tend to be much more profitable for insurers than Medigap and Part D plans,¹ so they give brokers significantly higher commissions for enrolling beneficiaries in MA. The maximum commissions that the Centers for Medicare & Medicaid Services (CMS) permits insurers to pay are $626 per initial beneficiary enrollment and $313 for each subsequent year that the beneficiary remains in MA (Table); assuming an 18-year life expectancy, this generates $5947 in commissions. Commissions for enrollment in a Medigap plan (which are not regulated by CMS) plus a Part D plan are likely to sum to 50% to 70% of this total.

Table.  Broker Financial Incentives and Possible Reforms

 

Insurers can also pay brokers for “administrative costs,” for steering beneficiaries toward more profitable MA plans, and for meeting enrollment targets. Some insurers also pay brokers as much as $100 to conduct beneficiary “health risk assessments,” through which brokers record diagnoses that can contribute to higher beneficiary risk scores and generate higher payments from Medicare to the MA plan. Medicare pays an estimated 22% ($83 billion) per year more for MA enrollees than it would spend if those beneficiaries were enrolled in traditional Medicare.³ MA plans can use part of this additional revenue to pay for broker-conducted health risk assessments and to pay high commissions and administrative costs to brokers.

The Table includes proposals for mitigating incentives that insurers give brokers to place their own financial interests above beneficiaries’ needs. Some of these proposals are contained in the 2025 CMS MA final rule, but the rule does not address the higher commissions paid to brokers for enrolling beneficiaries in MA. Importantly, it has been stayed by a US district court in Texas (Table). Federally funded State Health Insurance Assistance programs, an alternative to brokers, provide free counseling and do not have incentives to favor some plans over others. However, they tend to be underfunded and rely heavily on volunteers.

The second key feature that beneficiaries often do not understand is that by enrolling in MA, they are making what is likely to be an irreversible, lifelong decision.⁴ This Medicare Advantage “trap” occurs because, although it is easy to switch from traditional Medicare to MA, in 46 states it is can be very costly, if not impossible, to switch from MA to traditional Medicare. The Affordable Care Act made medical underwriting illegal for most health insurance, but after the initial enrollment period, underwriting is permitted for Medigap policies. Beneficiaries who would like to switch from MA to traditional Medicare may find that no plan in their state will issue them a policy or that policies offered to them are prohibitively expensive, especially if they are in poor health. Barriers to switching from MA to traditional Medicare are made more serious because the MA clinician network directories that beneficiaries can consult when choosing a plan are often inaccurate (listing physicians as in-network when they do not in fact accept patients from a plan) and because these networks can change and narrow over time.

Between 2014 and 2022, the annual rate at which beneficiaries switched from MA to traditional Medicare decreased from 5% to 1.2%,⁵ possibly due to decreases in MA plan premiums and increases in supplemental benefits during this period. Beneficiaries who switch to traditional Medicare are likely to be older, from rural areas, in poor health, and dually eligible for Medicare and Medicaid.^5,6 Currently, only Maine, Massachusetts, Connecticut, and New York mandate guaranteed issue and community rating for Medigap plans—that is, they require that plans accept all beneficiaries and that premiums be set at a community rate, rather than based on an individual’s health status. In these states, switching rates for high-need patients from MA to traditional Medicare are 5 times higher than those in other states (4.8% vs 1.0%).

Legislators may be reluctant to mandate guaranteed issue and community rating because of pressure from insurers and because of concern that these requirements could cause Medigap premiums to increase. Although premiums have not, on average, been higher in states with guaranteed issue and community rating,⁸ premiums could rise if larger numbers of high-need beneficiaries switch to traditional Medicare. There are ways to mitigate this challenge, for example, by adding an income-adjusted Medigap premium surcharge for beneficiaries who switch.⁹

Beneficiaries making crucial, complex, often irrevocable decisions when enrolling in Medicare deserve full information and unbiased guidance to help them select the plan that best suits their preferences and medical needs. Brokers should not have incentives to place their financial interests above the needs of the people they are meant to serve. Beneficiaries, their physicians, and their representatives in state and federal legislatures need assistance to become aware of the obstacles to switching from MA to traditional Medicare. CMS and nonprofit organizations such as AARP make some efforts to help beneficiaries understand switching barriers, but major gaps remain. For example, the CMS’s Get Started with Medicare website leads directly to a Compare Original Medicare and Medicare Advantage table, which makes no mention of switching barriers. CMS and organizations that serve Medicare beneficiaries can and should do much more.

Corresponding Author: Lawrence P. Casalino, MD, PhD, Department of Population Health Sciences and Cornell Health Policy Center, Weill Cornell Medical College, 575 Lexington Ave, New York, NY 10022 (Lac2021@med.cornell.edu).

Published Online: March 17, 2025. doi:10.1001/jama.2025.1759

Conflict of Interest Disclosures: None reported.

Funding/Support: This work was supported by grants from the Physicians Foundation Center for the Study of Physician Practice and Leadership at Weill Cornell Medical College and from Arnold Ventures.

Role of the Funders/Sponsors: The Physicians Foundation and Arnold Ventures had no role in the preparation, review, or approval of the manuscript or decision to submit the manuscript for publication.

Disclaimer: The views presented here are those of the authors and not necessarily those of the Physicians Foundation or Arnold Ventures.

Additional Contributions: We would like to thank Gina Upchurch, RPh, MPH, for her thoughtful comments on a prior version of this manuscript.