Brokers Get Paid More to Enroll Seniors in Medicare Advantage. Is That a Problem?

The system of paying Medicare agents and brokers more money if they enroll someone in a Medicare Advantage plan rather than traditional Medicare with a supplement plan needs to be changed, according to several members of the Medicare Payment Advisory Commission (MedPAC).

“The broker compensation piece really frustrates me,” MedPAC member Stacie Dusetzina, PhD, of Vanderbilt University School of Medicine in Nashville, Tennessee, said at a commission meeting on Friday. “I don’t think that people should have to work for free, and they are clearly a great source of information. A lot of beneficiaries rely on them, but the differences in how you get compensated across different plans, I think, is not a good thing. We should level the playing field so that your incentive is to get people into the right plan for them, and you don’t get paid differently based on which plan they go into.”

Gokhan Metan, PhD, of WiseCare AI in St. Louis, agreed. “When I look at the total agent/broker compensation payouts of $6.9 billion reported [by MedPAC staff] — which, by the way, I believe is an underestimate of what is actually being paid — if you compare that figure with the $55.2 million [for] SHIP, the ratio is 125 to 1 … of commercial marketing compensation to objective public counseling. That, to me, is very problematic.” Metan was referring to the State Health Insurance Assistance Program (SHIP), a federally funded program with offices nationwide designed to give beneficiaries unbiased information on choosing a plan.

Commission members were discussing a presentation from the commission staff on how beneficiaries choose which Medicare plan to sign up for. The staff cited a 2021 Commonwealth Fund report finding that independent agents and brokers can get paid up to $694 for enrolling a patient in a Medicare Advantage plan, compared with an average of $520 — depending on state laws and regulations — for enrolling them in a Medicare supplement plan plus Part D prescription insurance. These differences could cause agents to favor Medicare Advantage plans over traditional fee-for-service Medicare, said Ledia Tabor, MPH, a MedPAC principal policy analyst.

Staff members also cited a 2022 Commonwealth Fund report which found that more than half of beneficiaries used a variety of sources to make plan decisions, including private insurance brokers (used by 31% of those who chose a Medicare Advantage plan and 30% of those who chose traditional Medicare with a supplement), friends and family (20% and 14%), and the Medicare.gov website or Medicare hotline (9% and 5%). Only 7% of Medicare Advantage enrollees and 3% of traditional Medicare enrollees said they incorporated ads on TV or elsewhere for making their decision. And a total of 5% of traditional Medicare enrollees and 4% of Medicare Advantage enrollees used SHIPs in their decision-making, the Commonwealth Fund found.

Metan expressed concern about the lack of funding for SHIP. “SHIP is structurally underfunded,” he said, noting figures from the commission staff showing that the inflation-adjusted discretionary SHIP funding declined by 26% from 2008 to 2025 while Medicare enrollment grew 53%. “I think that’s very concerning.”

Metan suggested two possible solutions. “Congress could index SHIP discretionary appropriations to Medicare enrollment growth going forward, and provide a one-time catch-up allocation to address the accumulated funding” gap, he said. “Another alternative could be … For every dollar [Medicare Advantage] plans compensate agents and brokers, another dollar goes into a pool of funding for SHIP.”

Commission member Robert Cherry, MD, of UCLA Health in Los Angeles, said it was troubling that SHIP offices were already at capacity even when they were only being used by about 5% of enrollees. “Imagine if 40%, 50%, or 60% utilize the service, absolutely they wouldn’t be able to take care of the beneficiary,” he said. “So there needs to be some sort of alternative source of funding to augment the resource.” For example, those who are willing to wait 30 days could still see a SHIP counselor free of charge, “but if you need an expedited appointment within 5 business days, that maybe there’s some sort of nominal fee. There needs to be some sort of funding stream at the end of the day” to keep the SHIP offices functioning, he said.

Commissioner Scott Sarran, MD, MBA, of Harmonic Health and Triple Aim Geriatrics in Cook County, Illinois, suggested that artificial intelligence (AI) could be a useful tool for beneficiaries to use in making their selection. “Clearly, we can’t solve this just with human beings,” he said. “This is a space that is just perfectly, I think, designed for AI tools to guide people in an objective fashion. I think the keys to that are going to be to get the right information in at the front end.”

But commissioner Brian Miller, MD, MBA, MPH, of Johns Hopkins University, in Baltimore, emphasized that no matter what information sources they use, beneficiaries should be free to choose whatever plan they’d like, regardless of whether it seems to make the most sense. He likened making a less-than-optimal choice of Medicare plan to purchasing the wrong kind of car.

“I drive a convertible, and there was a lot of snow here a couple months ago, and having a rear-wheel drive convertible was not an optimal choice,” Miller, of Johns Hopkins University in Baltimore, said last Friday at a MedPAC meeting. “I think we can all agree that did not work well for me … But the point is, I made a choice that was consistent with my values.”

“We should support people in making better decisions, but recognize that people make the decisions that correspond with their values, and sometimes those decisions the rest of us might think are suboptimal,” he said. “I think that we need to recognize that beneficiaries have agency, they have autonomy, and they have dignity, and that we need to empower them, as opposed to infantilize them. And so we need to support rather than dictate choice, and recognize it’s OK for people to make the wrong choice.”