Advancing the Measurement of Favorable Selection in Medicare Advantage: Evidence From Encounter Data

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ID: 320491
2026
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Abstract
Abstract Introduction Debate persists over how favorable selection in Medicare Advantage (MA) affects federal spending relative to Traditional Medicare (TM). Prior studies, including the Medicare Payment Advisory Commission’s (MedPAC’s) March 2025 Report, focus on TM-to-MA switchers–roughly one-third of MA enrollees–but extrapolating these findings to the broader MA population is sensitive to identifying assumptions because switchers’ cost patterns may differ from non-switchers. This study uses MA encounter data to compare switchers and non-switchers and assess an alternative extrapolation approach to estimating favorable selection. Methods We estimated favorable selection among 1.4 million MA enrollees from 2020 to 2022, generating separate estimates for switchers and non-switchers. Using a 5% national Medicare sample, we attempted to replicate MedPAC’s switcher-based analysis, then modified its extrapolation by comparing risk-adjusted costs (imputed with TM claims) between switchers and non-switchers using MA encounter data. Results Favorable selection ranged from 4.9% to 5.8% between 2020 and 2022–32% to 40% lower than our attempted replication of MedPAC’s estimate (8.2% to 8.8%). Conclusion Using an alternative extrapolation approach lowered favorable selection, underscoring its sensitivity to methods and the importance of further refinement for MA payment policy.
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Authors Debra Bozzi, Ariel Caplan, Jared Doom, Emily Boudreau, Mike Hartjes, Richard Schwartz, Yong Li, A. Ray, Gosia Sylwestrzak
Journal Health Affairs Scholar
Year 2026
DOI
10.1093/haschl/qxag182
URL
https://doi.org/10.1093/haschl/qxag182
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