Medicare Advantage Enrollment and Total Medicare Program Spending
Greater Medicare Advantage (MA) enrollment was associated with lower standardized Medicare spending per capita for the years 2012-2021. Increased MA enrollment over the period could have generated as much as $111 billion in savings to the Medicare program.
MA enrollment has increased steadily over the past two decades, while Medicare spending per capita has been unexpectedly low relative to government agencies’ projections. Prior research has suggested several reasons for the lower than projected spending, but the relationship between MA enrollment and Medicare program spending had not been explored.
This study, published in INQUIRY: The Journal of Health Care Organization, Provision, and Financing, found that 10 percentage point higher MA penetration was associated with 1.5% lower total Medicare spending per capita. The study’s findings suggest that the recent growth of MA has played a key role in moderating overall Medicare program spending.
Related Public Policy Research
Potential Medicare Savings on Select Services Subject to Fraud, Waste & Abuse
Traditional Medicare could have saved $7 billion from 2019-2023 on four services, which the HHS Office of the Inspector General identified as subject to fraud, waste, and abuse—skin substitutes, catheters, genetic testing, and off-the-shelf orthotic braces—if its utilization rates mirrored those of Medicare Advantage.
Medicare Advantage Supplemental Benefits Are Associated with Improved Health Quality
The use of Medicare Advantage (MA) supplemental benefits—in particular, food and transportation benefits—is associated with improved healthcare quality, especially in managing diabetes and cardiovascular conditions. This analysis of dual eligible special needs plan enrollees highlights the importance of maintaining flexibility in offering non-medical benefits to support complex health and social needs.
Medicare Advantage Growth Is Associated with Lower Total Medicare Spending
In the last decade, growth in Medicare program spending has been slower than projected, spurring questions about factors that contribute to this trend. This analysis suggests that Medicare Advantage (MA) enrollment, which has grown significantly in the same time frame, may be one such factor.