Medicare Advantage Cost Analysis and Benefits Overview

This document is a technical report that analyzes the cost differences between Medicare Advantage and Traditional Medicare. It details how Medicare Advantage costs the federal government less while providing additional value through lower out-of-pocket costs and additional services. The report outlines that in 2025, government payments to Medicare Advantage plans were approximately 91% of those for Traditional Medicare. It explains that Medicare Advantage plans include additional benefits such as dental, vision, and hearing coverage, which are not available under Traditional Medicare. The report also discusses the care and cost management strategies employed by Medicare Advantage plans, which contribute to their ability to provide these additional benefits without incurring extra costs to the federal government. Furthermore, it presents data indicating that Medicare Advantage provides $63 billion annually in additional benefits, translating to an average of $2,256 per year for each beneficiary. The analysis includes a sensitivity analysis addressing potential differences between the populations served by both programs.