Rural Beneficiaries Favor Traditional Medicare
Medicare beneficiaries living in rural counties overwhelmingly choose traditional Medicare with stand-alone prescription drug plans (PDPs) over Medicare Advantage options, according to comprehensive analysis from KFF. This trend highlights significant disparities in healthcare coverage preferences between rural and urban communities.
In 2025, 58% of Medicare beneficiaries residing in rural areas nationwide are enrolled in stand-alone prescription drug plans, while the remaining 42% opt for Medicare Advantage drug plans (MA-PDs). This preference for traditional Medicare is especially pronounced in certain states.
State-by-State Rural Medicare Trends
The disparity becomes even more evident at the state level. In 27 states, at least half of Medicare Part D enrollees living in the most rural areas choose stand-alone prescription drug plans over Medicare Advantage alternatives. The trend is particularly striking in eight states where 75% or more of Part D enrollees in the most rural areas select prescription drug plans: Nevada, Alaska, Massachusetts, California, Kansas, Wyoming, Nebraska, and South Dakota.
KFF researchers attribute this pattern primarily to limited participation of Medicare Advantage plans in rural regions. Their analysis examined 2025 Part D enrollment in both stand-alone prescription drug plans and Medicare Advantage drug plans, evaluating geographic distribution patterns nationally and at individual state levels.
Urban-Rural Medicare Coverage Divide
A related KFF analysis discovered that traditional Medicare coverage rates vary significantly based on county classification. The share of Medicare beneficiaries enrolled in traditional Medicare reaches 58% in the most rural counties, compared to 48% in rural counties bordering urban areas and just 44% in counties within urban regions.
These figures paint a clear picture of how geography influences Medicare coverage choices, with rural beneficiaries consistently showing stronger preference for traditional Medicare options.
Medicare Advantage Growth Despite Rural Gaps
Despite lower rural adoption, Medicare Advantage continues its remarkable overall growth trajectory. Since 2010, the proportion of Medicare beneficiaries receiving benefits through private Medicare Advantage insurers has more than doubled.
Currently, more than half (54%) of all Medicare beneficiaries—approximately 68 million Americans—are enrolled in Medicare Advantage plans. The 2024 Medicare Advantage program featured 5,678 plan options offered by 175 organizations, serving about 33.6 million beneficiaries according to MedPAC’s March 2025 report.
The Congressional Budget Office (CBO) projects this growth will continue, with nearly two-thirds of all Medicare beneficiaries expected to join private plans by 2033.
Financial Implications of Medicare Advantage
The federal government’s financial commitment to Medicare Advantage is substantial. In 2025, the government will pay insurers 20% more for Medicare Advantage enrollees than for traditional Medicare beneficiaries—a difference amounting to approximately $84 billion or $2,255 per beneficiary.
According to MedPAC, these additional payments fund supplemental benefits not available in traditional Medicare:
- 38% reduces cost sharing for Medicare Advantage enrollees
- 25% covers non-Medicare services
- 23% enhances Part D benefits through lower premiums or reduced cost sharing
- 6% reduces Part B premiums for MA enrollees
- 8% covers administrative expenses and profit
Recent Policy Developments
The financial landscape for Medicare Advantage plans improved significantly in April 2025 when CMS announced a 5.06% payment increase for Medicare Advantage and Part D Prescription Plans for the coming year. This represents a substantial increase from the 2.23% originally proposed under the previous administration.
New Leadership and Reform Efforts
Dr. Mehmet Oz, appointed by President Trump and confirmed by the Senate in March 2025 to lead CMS, has expressed support for Medicare Advantage while acknowledging its higher costs compared to traditional Medicare. During his confirmation hearing, Dr. Oz committed to scrutinizing Medicare Advantage operations, particularly focusing on potential upcoding of services.
This emphasis on coding practices aligns with MedPAC’s March 2025 report, which recommends several reforms to improve Medicare Advantage plans. Key recommendations include replacing the current quality-bonus program, establishing more equitable benchmarks, and improving data collection regarding patient encounters.
Balancing Rural Needs and Program Growth
As Medicare Advantage continues its expansion, addressing the urban-rural divide in enrollment patterns remains a critical challenge. The persistent preference for traditional Medicare in rural communities suggests potential gaps in Medicare Advantage availability or suitability for rural beneficiaries.
Policymakers face the complex task of ensuring equitable access to Medicare options regardless of geographic location while implementing necessary reforms to control costs and improve service quality across both traditional Medicare and Medicare Advantage programs.
