---
type: claim
domain: health
description: "PACE's 0.13% Medicare penetration after five decades reveals that structural barriers—not model viability—prevent full-capitation scaling despite clinical effectiveness"
confidence: likely
source: "NORC at the University of Chicago, PACE Market Assessment Final Report, March 2025"
created: 2025-03-17
---

# PACE serves 90K enrollees after 50 years, demonstrating structural barriers prevent full-capitation scaling

The Program of All-Inclusive Care for the Elderly (PACE) represents the most fully integrated capitated care model in existence—a single provider assumes 100% financial risk for all medical, social, and psychiatric needs of nursing-home-eligible seniors. Yet after 50+ years of operation (originating with On Lok in San Francisco in the 1970s), PACE serves only 90,580 enrollees as of end-2025 across 198 programs in 33 states.

This represents 0.13% penetration of the 67 million Medicare-eligible population, despite serving the most complex and costly beneficiaries (average age 76, 7+ chronic conditions, nursing-home eligible). The gap between model performance and market penetration reveals that structural barriers—not model viability—prevent scaling of full-risk capitated care.

## Evidence

PACE enrollment data (NORC 2025):
- January 1, 2025: 80,815 enrolled
- End of 2025: 90,580 enrolled (12% annual growth, fastest in recent years)
- 198 programs across 33 states + DC
- Nearly half of enrollees served by 10 largest parent organizations
- Over half of enrollees concentrated in 3 states: California, New York, Pennsylvania

Structural barriers identified by NORC:
1. **Capital requirements**: Large upfront investment for PACE centers and care delivery infrastructure
2. **Awareness deficit**: Low awareness among potential enrollees and referral sources
3. **Insufficient economies of scale**: Enrollee concentration too low in most service areas
4. **Geographic concentration**: 3-state concentration limits national model validation and replicability
5. **Regulatory complexity**: State-by-state approval process creates friction for multi-state operators
6. **Organizational structure**: Most operators are single-state, cannot leverage multi-market efficiencies
7. **Financial eligibility**: Contingent on Medicare + Medicaid dual-eligible status

## Why This Matters

The 12% growth in 2025 represents the fastest expansion in recent years, coinciding with for-profit entry bringing capital and operational scaling capacity. This suggests PACE may be approaching an inflection point. However, the 50-year lag between model proof and scaling attempt is itself evidence of barrier magnitude. If full-risk capitation were economically inevitable (the "attractor state" hypothesis), PACE should have grown exponentially after proving clinical effectiveness in the 1970s-1980s. Instead, it required five decades and external capital to reach 12% annual growth.

## Comparison to Medicare Advantage

Medicare Advantage achieved 54% penetration of Medicare eligibles through a fundamentally different approach: partial risk, network-based care, and massive capital deployment. PACE's failure to scale despite superior integration and clinical outcomes demonstrates that full capitation faces barriers that partial-risk models avoid—suggesting capital availability and regulatory friction, not model elegance, determine scaling outcomes.

---

Relevant Notes:
- [[value-based-care-transitions-stall-at-the-payment-boundary-because-60-percent-of-payments-touch-value-metrics-but-only-14-percent-bear-full-risk]]
- [[the-healthcare-attractor-state-is-a-prevention-first-system-where-aligned-payment-continuous-monitoring-and-ai-augmented-care-delivery-create-a-flywheel-that-profits-from-health-rather-than-sickness]]
- [[pace-demonstrates-integrated-care-averts-institutionalization-through-community-based-delivery-not-cost-reduction]]

Topics:
- [[domains/health/_map]]
