The present Medicare Advantage (MA) offerings by private insurance began in 1999 as an alternative to traditional Medicare health insurance for seniors. Today, over half of all Medicare recipients are enrolled through this system.
The funds that support MA comes from Medicare. “We estimate that Medicare spends approximately 22 percent more for MA enrollees than it would spend if those beneficiaries were enrolled in traditional Medicare, a difference that translates into a projected $83 billion in 2024.” 1 That is ~$2,700 more per person per year. As demonstrated by the graph below, MA plans are a very profitable sector of the healthcare insurance industry.
In the end, this program is a government subsidy to the for-profit insurance industry. “Medicare Payment Advisory Commission (MedPAC), the nonpartisan agency reporting to Congress, recently estimated that MA overpayments added $82 billion to taxpayers’ costs for Medicare in 2023 and $612 billion between 2007 and 2024.”2
Footnotes
- https://www.medpac.gov/wp-content/uploads/2024/03/Mar24_Ch12_MedPAC_Report_To_Congress_SEC-1.pdf – see page 379
- Less Care at Higher Cost—The Medicare Advantage Paradox by Adam Gaffney, MD, MPH1,2Stephanie Woolhandler, MD, MPH1,2,3,4David U. Himmelstein, MD1,2,3,4