The Beneficiary Experience: The Costs of Medicare Advantage

Medicare is becoming more costly and beneficiaries are increasingly struggling to afford care. In 2023, 41% of callers to the Medicare Rights national helpline had questions about affording various Medicare costs, nearly double the percentage of callers who were primarily concerned about costs in 2012. With 54% of eligible beneficiaries enrolled in Medicare Advantage (MA) in 2025, with projections indicating this number will continue to grow, reducing MA costs and overhauling its financial structure are key to making Medicare sustainable.

Medicare Advantage Marketing and Compensation

The three new briefs in our Medicare Sustainability series examine how MA plans can overpromise and underdeliver in order to drive up enrollment and compensation to MA organizations. During a time when Medicare costs are rising while coverage gaps remain, people are motivated to find the plan that offers the most benefits and savings. Using agents and brokers who receive commissions for enrolling beneficiaries, MA plans aggressively market supplemental benefits and attractive incentives. Increased enrollment results in increased compensation for plans and third parties, which increases funding for additional benefits and marketing. Combined with MA organizations’ strategy to flood the market with similar plans and make it more difficult for people to switch or leave their plan—discussed earlier in the Medicare Sustainability series—the payment structure of MA creates an ever-increasing cycle of overspending.

While federal cost-saving options like Medicare Savings Programs and the Part D Low-Income Subsidy remain underused due to notoriously difficult enrollment processes, MA organizations and third-party marketing organizations steer beneficiaries toward MA plans with benefits that claim to save them money. As a result, beneficiaries are pushed to enroll in plans that may not meet their care needs and don’t deliver the cost assistance they promise, while brokers, agents, and third-party marketers reap commissions.

Beneficiary Experiences from the Helpline

This unsustainable incentive structure and overpayment cycle of MA have real impacts on beneficiaries’ care. The new Medicare Sustainability briefs include real stories from callers to the Medicare Rights national helpline who were misled by MA marketing and steered by biased sources to act against their best interests.

These include people who were misled by marketers and enrolled in new MA plans without being given the chance to make a fully informed choice. These beneficiaries found themselves locked out of previous plans that had worked well for them.

Some people enrolled in MA plans after being promised large discounts or cash-like benefits, only to find the benefits delayed or inaccessible and the new plan unfit for their health needs.

Many callers enrolled in an MA plan for dental, vision, or hearing coverage, which aim to fill Original Medicare’s significant coverage gaps in those areas. But when they try to receive care, they run into policy restrictions and insufficient coverage.

Needed Policy Reforms

Making Medicare Advantage sustainable requires breaking the overpayment cycle and fixing the conditions that allowed it to exist. This means limiting payments to MA organizations, standardizing and regulating MA plans, and expanding Original Medicare’s protections and benefits.

The current system rewards MA organizations for funneling money into marketing that drives enrollment, often against beneficiaries’ best interest. Correcting the rules for MA compensation and removing avenues of overpayment could stabilize the MA market and the financial outlook of the Medicare program.

Ultimately, the MA overpayment cycle exploits Medicare’s existing coverage gaps and inaccessibility. Standardizing MA plans’ offerings and making information about plans readily available could empower people to make independent and informed enrollment decisions without steering from third-party actors. Large-scale reform that equalizes coverage and cost protections between MA and Original Medicare will remove a key incentive driving MA marketing, uprooting the unsustainable structure.

Read the new Medicare Sustainability briefs.