Key Advantages of Medicare Advantage Plans Versus FFS Medicare


Medicare Advantage plans draw a more diverse beneficiary population and can result in lower healthcare spending for low-income beneficiaries.

Medicare Advantage plans may provide better access to care and lower healthcare spending for enrollees, compared to fee-for-service Medicare, according to a study from ATI Advisory conducted on behalf of Better Medicare Alliance (BMA).

“Medicare Advantage continues to demonstrate that it offers important cost protections and value for Medicare Advantage beneficiaries,” said Allison Rizer, principal at ATI Advisory and study lead.

“We see particularly strong results for historically disadvantaged populations, including Black and Hispanic beneficiaries and those who are low-income,” noted Laura Benzing, analytic lead at ATI Advisory.

The study found that Medicare Advantage draws low-income beneficiaries, with 46 percent of Medicare beneficiaries whose incomes were 200 percent of the federal poverty level or less enrolling in a Medicare Advantage plan. This share has grown 15 percent year-over-year over the last four years.

As a result, more than half of the Medicare Advantage program’s beneficiaries are low-income (52.7 percent).

The study also highlighted that beneficiary spending is lower in Medicare Advantage plans than in fee-for-service Medicare and the distinction becomes increasingly stark.

Healthcare spending grew five percent for Medicare Advantage enrollees from 2018 to 2019, but it grew nine percent for fee-for-service Medicare beneficiaries. While the average total spending for a Medicare Advantage enrollee is $3,524, the average total spending for a fee-for-service Medicare beneficiary is $5,489.

The researchers also studied the share of Medicare beneficiaries that spend over a fifth of their income on healthcare, also known as beneficiaries’ “cost burden.” They found that approximately 13 percent of Medicare Advantage enrollees faced a cost burden, whereas 20 percent of fee-for-service Medicare beneficiaries were cost-burdened.

Specifically, among low-income beneficiaries, less than three out of ten low-income Medicare Advantage beneficiaries were cost-burdened (27 percent) compared to almost half of all low-income, fee-for-service Medicare beneficiaries (48 percent).

Medicare Advantage plans are known for drawing a more diverse population of beneficiaries. Around a tenth of Medicare Advantage enrollees identify as Latino enrollees and 14 percent of the enrollees identify as Black enrollees, the BMA study found. These population shares are in the single digits for fee-for-service Medicare.

In Medicare Advantage, cost burden is lowest among Latino enrollees (11 percent), whereas cost burden is lowest among Black beneficiaries in fee-for-service Medicare (18 percent).

The study also found that among Medicare Advantage enrollees and fee-for-service Medicare beneficiaries with similar conditions, healthcare spending was lower among Medicare Advantage enrollees.

Slightly more fee-for-service Medicare beneficiaries were satisfied with the quality of their healthcare than Medicare Advantage enrollees—96.0 percent versus 94.9 percent, respectively—while slightly more Medicare Advantage enrollees reported easy access to care than fee-for-service Medicare beneficiaries—95.6 percent versus 95.0 percent, respectively.

“As this study shows, the path to meaningfully addressing Americans’ concerns about out-of-pocket costs and health care affordability and access for our nation’s seniors leads us to Medicare Advantage,” said Mary Beth Donahue, president and chief executive officer of the BMA. “There is perhaps no more meaningful measurement of a program’s value than its effect on the consumer.”

Medicare Advantage organizations have been defending the program’s success since a MedPAC report asserted that Medicare Advantage programs may deliver savings to health plans and enrollees but that they are a fiscal drain for the government and taxpayers.

The program received overwhelming support on the political scene when 340 members of the US House of Representatives signed a letter to CMS commending Medicare Advantage benefits.

Providers have also expressed support for the program but offered some recommendations for its improvement as the nation emerged from the first year of the coronavirus pandemic.

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