A recent study conducted by UnitedHealth Group found that Medicare Advantage (MA) beneficiaries spend 40% less annually than patients enrolled in fee-for-service Medicare. Average annual spending (including premiums and out-of-pocket costs) for traditional Medicare beneficiaries with a prescription drug plan was $5,361. However, the annual spending of MA beneficiaries was $3,558.
When it comes to premiums, those who are enrolled in traditional Medicare with a drug plan pay an average of $2,186 per year on premiums (the other $3,174 was spent on out-of-pocket costs). Beneficiaries who opt for additional Medigap coverage pay an average of $4,392 per year on premiums with an additional $1,599 in out-of-pocket costs. MA beneficiaries, however, spend less in premiums and out-of-pocket costs in comparison ($2,013 and $1,545, respectively).
The report also included state-specific savings. For example, in the state of Florida, MA beneficiaries experience an average savings of 57% compared to Medicare FFS beneficiaries. MA beneficiaries in Florida have an average $2,880 savings over Medicare FFS and a prescription drug plan and an average $3,865 savings over Medigap Part G option.
In the state of Maryland, MA beneficiaries experience an average savings of 32% compared to Medicare FFS beneficiaries, totaling a $1,574 average savings over Medicare FFS and prescription drug plan (an average $1,916 savings over Medigap Part G).
In Texas, MA beneficiaries save an average of 43% compared to Medicare FFS beneficiaries, resulting in a $2,180 average savings over Medicare FFS and prescription drug plan ($2,449 average savings when compared to Medigap Part G option).
California also sees a significant cost savings for MA beneficiaries, averaging to a 45% savings when compared to Medicare FFS beneficiaries ($2,029 average savings over Medicare FFS and prescription drug plan and $2,704 average savings over Medigap Part G).
New York’s average savings for MA beneficiaries is 44%, resulting in a $1,317 savings over Medicare FFS with a prescription drug plan and $3,151 savings over Medigap Part G option.
The report also notes that MA plans typically offer additional services and financial protections that are not offered by Medicare fee-for-service plans, such as: dental, vision, and hearing services; meals, non-emergency transportation and care coordination; and in-home health assessments.
The researchers who conducted the study acknowledged that estimated health care spending is often a “key factor in the choice between MA and [fee-for-service] coverage.”