Medicare Advantage Spending Continues to Outpace Original Medicare

The Kaiser Family Foundation recently released a new issue brief showing how growth in Medicare Advantage (MA) enrollment and overpayment caused an estimated $7 billion in additional Medicare spending in 2019. This analysis comes just before the anticipated release of the Medicare trustee’s report, an annual projection of Medicare spending and trust fund solvency.

MA is a private plan option that people with Medicare can choose instead of fee-for-service Original Medicare. MA enrollment continues to grow, although there are clear and important trade-offs between the two coverage options.

Though often assumed to be efficient, MA has never saved the Medicare program money. Instead, spending per MA enrollee continues to outpace spending for Original Medicare beneficiaries.

The KFF issue brief shows that spending per MA enrollee was $321 more per year than for Original Medicare beneficiaries, after adjusting for differences in health status and geographic distribution. KFF also projects that spending for MA enrollees will grow faster than spending for Original Medicare beneficiaries, widening the disparities at a time when policymakers will likely be looking for ways to achieve Medicare savings, potentially as part of the forthcoming budget reconciliation bill. The issue brief explores different MA spending projections, identifying potential payment reforms by showing how overall program spending would change if MA were brought more into line with Original Medicare.

At Medicare Rights, we are deeply concerned about overspending and other harmful MA trends, including denying needed care, overcharging, marketing, cherrypicking healthier enrollees, and driving sicker enrollees out of MA. We urge the Biden administration and Congress to investigate MA policies to ensure beneficiaries and taxpayers get what they have been promised, updating rules and guidance as needed.

Read the issue brief.

Read more about MA overpayments.

Read more about our MA concerns.