Medicare Advantage Raises Cost Concerns Despite Lack of Better Outcomes

Medicare Advantage, established in 1997 as a private, for-profit alternative to traditional Medicare, was intended to improve health outcomes while reducing federal costs. Contrary to this intent, Medicare Advantage plans have not demonstrated better health outcomes and actually cost the federal government more per enrollee compared to traditional Medicare. These plans are managed by private insurers such as UnitedHealthcare and Humana and restrict patients to specific network providers, often employing case management practices that limit access to care available under traditional Medicare.

Multiple analyses, including a 2023 report by Physicians for a National Health Program leveraging data from the Congressional Medicare Policy Advisory Commission (MEDPAC), reveal significant overpayments to insurers administering Medicare Advantage, estimated between $80 billion and $140 billion for the year 2022 alone. This indicates Medicare Advantage plans have been financially advantageous for private insurance companies, contributing to their extensive marketing and expansion.

The operational differences in Medicare Advantage plans, including network limitations and utilization management, have raised concerns about patient access to care relative to traditional Medicare. These factors, combined with increased program costs and lack of clear benefits in clinical outcomes, have prompted discussions on the program's reform or potential elimination.

Given the growing federal expenditure on Medicare programs and the ongoing scrutiny of private plan administration, policy stakeholders are evaluating avenues to enhance cost efficiency and ensure equitable care for seniors. The debate continues on how best to align Medicare's objectives with both fiscal responsibility and high-quality patient care, potentially through restructuring or scaling back Medicare Advantage offerings.