Members’ Choice of Benefits in Medicare Advantage Plans—An Example from New Jersey

We seek to identify the most relevant benefits offered by Medicare Advantage Health Plans that are attractive to members and that drive membership and market share. We explore plans operating in a single county in New Jersey between 2018 and 2023. A dataset of benefits from publicly available data sources was created and the variance inflation factor was applied to identify the correlation between the extracted features, avoiding multicollinearity and overparameterization problems. We categorized the variable market share and used it as a multinomial response variable with three categories: less than 0.3%, 0.3% to 1.5%, and over 1.5%. Categories were chosen to achieve approximately uniform distribution of plans (47, 60 and 65, respectively). A multinomial Lasso model using 5-fold cross validation tunes the penalty parameter and reduces overfitting by dropping some features from the model, thus increasing interpretability. For each category, important variables vary. Certain brands drive market share, as do PPO plans and prescription drug coverage. Benefits, particularly ancillary benefits that are not part of CMS’s required benefits, appear to have little influence, while financial terms such as deductibles, copays and out-of-pocket limits are associated with higher market share. Finally, we evaluated the multinomial Lasso model on a held-out test set. The model achieved an overall classification accuracy of 0.76, meaning that 76% of plans were correctly classified into the low, medium or high market share categories.