Medicare Advantage Payments Significantly Exceed Traditional Medicare Costs, driving Up Spending and Beneficiary Expenses
New estimates reveal that Medicare Advantage (MA) plans are projected to cost medicare significantly more than traditional Medicare (OM) for the same beneficiaries, contributing to the program’s solvency challenges and increasing costs for both taxpayers and enrollees.
In 2025, medicare Advantage payments are estimated to be $84 billion higher than what traditional Medicare would have spent for the same enrollees.
The Medicare Payment Advisory Commission (MedPAC) projects that in 2025,MA payments will be 20% higher-an estimated $84 billion more-than traditional Medicare would have spent to cover the same individuals.This substantial difference has grown considerably as MA enrollment has surged. KFF reports that these excess payments are “substantially larger than the $18 billion in higher spending a decade ago when about one-third of eligible beneficiaries were enrolled in a Medicare Advantage plan.” Without policy intervention, these overpayments are expected to continue increasing with MA enrollment, potentially jeopardizing Medicare’s long-term sustainability and the financial well-being of beneficiaries.
Further Reading
For a detailed analysis of enrollment trends and key developments in Medicare Advantage, read the KFF report, Medicare advantage in 2025: Enrollment Update and Key Trends.
To understand the history, payment structures, and policy implications of Medicare Advantage, explore resources from Medicare Rights at MA history,payment,and policy.
