Medicare Advantage Saves Taxpayer Dollars

Studies show that the Medicare Advantage program costs less than traditional Medicare

Letter to The WSJ. 

"When It comes to the Medicare Payment Advisory Commission (MedPAC), Matthew Fiedler and Benedic Ippolito get it wrong in “The Higher Price Tag on Medicare Advantage” (Letters, Feb. 18).

In claiming that the Medicare Advantage program costs taxpayers 20% more than if the same patients were in traditional Medicare, MedPAC makes no attempt to separate out the different kinds of enrollees. For example, many people in traditional Medicare are also in an employer plan. (Those people are probably relatively healthy.) Some Medicare Advantage enrollees are in special-needs plans. (Those people are less healthy.)

A true apples-to-apples comparison would separate out 16 categories of enrollees and compare the taxpayer cost for each. Yet for that to happen, the government has to do something it has never done: release the data.

Rep. Aaron Bean (R., Fla.) has introduced a bill in Congress that would force that very kind of disclosure. In the meantime, a rigorous study by Milliman estimates that taxpayers save $576 per enrollee per year when an enrollee joins a Medicare Advantage plan. This is consistent with an industry-financed study by Elevance Health.

The Elevance study also found that as Medicare Advantage penetration in a market increases, all doctors in the area begin to practice more efficient medicine. Owing to these “spillover effects,” a 10% increase in market share by Medicare Advantage plans leads to an average decrease in spending on all Medicare beneficiaries of between $105 and $127 per person per year.

John C. Goodman

President and CEO, Goodman Institute for Public Policy Research"