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Analysis also shows higher proportion of low- and modest-income beneficiaries in Medicare Advantage than Traditional Medicare.
In a new study by Better Medicare Alliance, the leading research and advocacy group supporting Medicare Advantage, and conducted by ATI Advisory, Medicare Advantage beneficiaries have reported $1,640 less in total annual health spending than those in Traditional Medicare.
The analysis is based on 2018 Medicare Current Beneficiary Survey (MCBS) data, the most recent year available, and represents an increase in consumer savings from years past. ATI Advisory analysis of 2017 MCBS data showed a $1,598 lower health spending in Medicare Advantage while 2016 data showed a savings of $1,276.
ATI Advisory additionally finds a 40% lower rate of cost burden in Medicare Advantage than Traditional Medicare (11.8% versus 20%). The lower cost burden in Medicare Advantage is of added importance given that 52.7% of Medicare Advantage beneficiaries live below 200% of the Federal Poverty Level, compared to 39.1% of Traditional Medicare beneficiaries. Cost burden is defined as spending 20% or more of one’s income on health costs.
“Congress and the Biden administration have set a worthy goal of lowering consumer healthcare costs and securing the best value possible for the Medicare dollar. This analysis shows that Medicare Advantage continues to do exactly that,” said Allyson Y. Schwartz, president and CEO of the Better Medicare Alliance. “With strong consumer protections, including an annual cap on out-of-pocket expenses, Medicare Advantage is saving beneficiaries an average of $1,640 a year over Traditional Medicare. This results in 40% lower cost burden for consumers than Traditional Medicare. The consumer savings in Medicare Advantage translates to meaningful financial security and peace of mind for millions of beneficiaries.”
Schwartz added successes like these don’t happen by accident.
"Medicare Advantage depends on support from policymakers to deliver consumer savings, high satisfaction, and better health outcomes for its proportionally lower-income beneficiary population, many of whom have complex chronic conditions," she said. "With this research in hand, we look forward to working with Congress and the Administration to maintain and strengthen this coverage lifeline for the 26 million Americans who rely on Medicare Advantage for their health care needs.”
Allison Rizer, principal at ATI Advisory and study lead, said Medicare Advantage is continuing to prove its value.
“We’re seeing plans increasingly shifting toward person-centered care, with innovative supplemental benefits and clinical models," Rizer said. "This latest analysis shows that Medicare beneficiaries also rely on Medicare Advantage for financial protection against high out-of-pocket and premium costs.”