Two studies, commissioned by UnitedHealth Group and conducted by Milliman, an independent actuarial and research firm, summarize the value of Medicare Advantage (MA) to the government and beneficiaries.
The first analysis, an update to a prior report completed in 2024, focused on the value of MA to the federal government in 2025. Analysts used publicly available federal data to estimate the value of the program by quantifying what is provided for each dollar of government spending paid to MA plans, compared to each dollar of government spending for traditional Medicare.
The study found that:
- MA costs the federal government 9 percent less than traditional Medicare. Milliman estimated that federal payments to MA plans were approximately 81 percent of the government’s costs for traditional Medicare, while using savings generated to fund additional benefits beyond traditional Medicare.
- The estimated average government costs for MA (to offer the same medical benefits as traditional Medicare and use savings generated to fund additional benefits) are $1,117 per member per month compared to $1,234 per member per month in traditional. The $117 monthly savings amount to over $1,400 per member per year.
- MA plans deliver $63 billion in savings in additional annual value to enrollees through lower cost sharing, reduced premiums, and enhanced supplemental benefits such as dental, vision, and hearing coverage.
Milliman said the key driver of these savings is due to the managed care structure of MA, which leverages provider networks, care coordination, and value-based arrangements to improve efficiency and quality.
The second report compares annual beneficiary health care costs across Medicare coverage options in 2025. Analysts found:
- An average non-dual eligible aged-in Medicare Advantage Prescription Drug (MA-PD) beneficiary spent 53 percent less on health care in 2025 compared to a similar beneficiary in traditional Medicare with a standalone drug plan (PDP) and Medigap Plan G.
- An average non-dual eligible aged-in MA-PD beneficiary’s total health care spending in 2025 was $3,651, compared to $7,790 under traditional Medicare with a prescription drug plan and Medigap Plan G. This included premiums and out-of-pocket cost sharing for medical, drug, dental, vision, and hearing services.
- MA-PD plans offer an annual out-of-pocket maximum, providing financial protection not available to beneficiaries in traditional Medicare, and nearly all MA-PD plans include supplemental benefits at little or no additional cost.