Does Medicare Advantage Cost Less Than Traditional Medicare?
Those in favor of expanding the role of private plans in Medicare argue that commercial insurers are more efficient than traditional Medicare and can therefore save taxpayers money. According to a new Commonwealth Fund analysis, however, those plans that have comparatively lower costs are concentrated in a small number of U.S. counties.<br /><br />
Authors Brian Biles, Giselle Casillas, and Stuart Guterman determined that in the 25 counties where the cost difference is greatest, private insurers spent a total of $5.2 billion less than what traditional Medicare would have been expected to spend. Outside those counties, though, private plans spent $4.8 billion <em>above</em> traditional Medicare’s projected costs.<br />
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The type of plan as well as local market conditions, the authors find, weigh heavily in determining the relative efficiency of Medicare Advantage versus the traditional program.