Medicare Advantage beneficiaries report $1,965 less in total annual health spending (out-of-pocket costs and premiums) than those in fee-for-service (FFS) Medicare, according to a new analysis from Better Medicare Alliance.
The study is based on 2019 Medicare Current Beneficiary Survey (MCBS) data, the most recent year available, and comes as new polling from Kaiser Family Foundation shows that addressing seniors’ out-of-pocket costs are among Americans’ top concerns for policymakers.
Findings indicate an increase of $325 in consumer savings compared to last year’s report. The 2021 analysis using 2018 MCBS data found $1,640 lower health spending in Medicare Advantage while an earlier study showed a savings of $1,598.
Researchers found that the average total spending in 2019 per beneficiary was $3,524 in MA compared with $5,489 for those in traditional Medicare.
Further, research shows that consumer savings in Medicare Advantage persist across race and ethnicity. Specifically, Black Medicare Advantage beneficiaries report $1,104 less in total health spending compared to FFS Medicare beneficiaries, while Latino Medicare Advantage beneficiaries see average savings of $1,421.
When considering rates of cost burden, defined as spending 20% or more of one’s income on health coverage, Medicare Advantage has a 35% lower rate of cost burden (13% in Medicare Advantage compared to 20% in FFS Medicare).
“As this study shows, the path to meaningfully addressing Americans’ concerns about out-of-pocket costs and health care affordability and access for our nation’s seniors leads us to Medicare Advantage,” said Mary Beth Donahue, President and CEO of the Better Medicare Alliance. “There is perhaps no more meaningful measurement of a program’s value than its effect on the consumer. In Medicare Advantage, we see that consumers are saving nearly $2,000 a year compared to FFS Medicare – savings that have continued to grow over recent years and are all the more valuable considering that over half of all Medicare Advantage beneficiaries live below 200% of the poverty line. With such robust cost protections across demographic groups, the value of Medicare Advantage for the Medicare dollar has never been clearer.”
“This study proves the worth of Medicare Advantage’s patient-centered approach to meet the clinical needs of underserved populations and lower out-of-pocket medical costs. These equity-enhancing lessons can serve as an example to inform the rest of the US health care system,” said A. Mark Fendrick, MD, Director of the University of Michigan’s Center for Value-Based Insurance Design and Member of Better Medicare Alliance’s Council of Scholars.
Read the full data brief here.