Two independent actuarial studies conducted by Milliman and released by UnitedHealth Group found that Medicare Advantage costs the federal government 9% less than traditional Medicare. Federal payments to MA plans average $1,117 per member monthly versus $1,234 for traditional Medicare, representing savings of over $1,400 annually per beneficiary. The studies also estimated that MA plans deliver $63 billion in additional annual value through supplemental benefits including dental, vision, and hearing coverage.
Non-dual eligible aged-in MA beneficiaries spend 53% less on healthcare compared to those in traditional Medicare with supplemental plans, with average annual spending of $3,651 versus $7,790 under traditional Medicare with prescription drug plans and Medigap Plan G coverage.
The analysis attributes the savings to Medicare Advantage’s managed care structure, including provider networks, care coordination, and value-based arrangements. Over 34 million Americans currently enroll in MA plans, making the cost comparison a significant data point in ongoing policy debates about the program’s future.