AHIP analysts say the new study supports previous findings that Medicare Advantage saves nearly $6,300 per beneficiary compared to traditional fee-for-service (FFS) Medicare while improving outcomes and patient experience.
In contrast to other studies that have compared Medicare Advantage and FFS, which focused exclusively on health care expenditures in Medicare , the AHIP said its report considered the full range of health care spending for Medicare beneficiaries, including payments from Medicare, Medicaid, Veterans Affairs, and Tricare, as well as any employer-sponsored or privately purchased supplemental coverage.
The new analysis provides a more comprehensive picture of health care spending for Medicare beneficiaries because 89 percent of FFS beneficiaries and 41 percent of Medicare Advantage beneficiaries have at least one other supplemental insurance in addition to Medicare, according to the executive summary of the report.
AHIP analysts drew conclusions from a national representative dataset of Medicare beneficiaries from 2021 through 2023, to estimate the overall health care related expenditures, including premiums and out-of-pocket spending, related to medical, dental, vision, and hearing care.
Researchers said they used propensity score matching, a statistical tool that creates matched groups of beneficiaries enrolled in Medicare Advantage and FFS who are similar across critical demographic and socioeconomic factors like age, sex, race, ethnicity, income, dual-eligibility status, number of chronic conditions, rural vs. urban geographic setting, and Census region, as well as measures of quality of care like self-reported general health, overall satisfaction with quality of care, access to medical care, and difficulties paying for medical bills.
Among the main findings:
- Annual health care expenditures per Medicare Advantage member, on average, were almost $6,300 lower than the per beneficiary costs for their FFS peers.
- On average, Medicare Advantage members saved an estimated $1,100 a year in out-of-pocket costs and $2,100 in insurance premiums compared to a matched set of similar FFS beneficiaries.
- For Medicare enrollees from underserved populations and those with complex needs, on average, Medicare Advantage members saved approximately $700 to $1,600 in out-of-pocket costs and $1,300-$1,900 in insurance premiums. Overall, total annual health care expenditures for these enrollees were $4,700-$10,000 lower than their peers in traditional FFS Medicare.