Medicare Advantage Beneficiaries Spend 36% Less on Out-of-Pocket Costs Than Those in Traditional Medicare — and the Gap Keeps Growing
Despite cost savings, MA beneficiaries report equal or better satisfaction with care quality than similar Fee-For-Service Medicare beneficiaries
WASHINGTON — A new independent analysis finds Medicare Advantage beneficiaries spent $2,824 less out of pocket in 2023 than those enrolled in Fee-for-Service Medicare, a 36% difference — and the gap between the two programs keeps growing, up 16% since 2022.
The analysis, conducted by ATI and released Wednesday by Better Medicare Alliance, found that Medicare Advantage beneficiaries reported similar levels of satisfaction with access to and quality of care as Fee-for-Service enrollees and were 15% more likely to report having had an annual wellness visit, despite spending less.
“With rising healthcare costs putting more pressure on seniors, this report shows that Medicare Advantage is delivering meaningful savings while maintaining high-quality care,” said Mary Beth Donahue, President and CEO of Better Medicare Alliance. “More than 35 million beneficiaries count on Medicare Advantage for the affordability, benefits, and coordinated care it provides, and policymakers should protect and strengthen what is working.”
Based on Medicare Current Beneficiary Survey data, the report’s key findings include:
- 36% less: Medicare Advantage beneficiaries spent 36% less out of pocket than Fee-for-Service beneficiaries in 2023 — an average of $2,824 per beneficiary.
- A widening gap: The difference grew 16% in a single year, from 2022 to 2023.
- Lower cost burden: Just 12% of Medicare Advantage beneficiaries faced cost burden — spending more than 20% of their income on healthcare — compared to 24% in Fee-for-Service.
- Similar satisfaction: Medicare Advantage beneficiaries reported similar satisfaction with their care quality and access, despite spending less than those in Fee-For-Service Medicare.
- Preventive care: Despite spending less, Medicare Advantage beneficiaries were 15% more likely to report having had an annual wellness visit.
- Consistent across the board: The lower spending held across income, race and ethnicity, geography — including rural areas — and number of chronic conditions.
The findings carry particular weight because Medicare Advantage enrolls a lower-income population with greater health needs: 54% of its beneficiaries reported incomes below 200% of the federal poverty level in 2023, compared with 30% in Fee-for-Service Medicare. More than three in four Medicare Advantage enrollees also report three or more chronic conditions. Even so, they spent less out of pocket and were far less likely to face cost burden from their healthcare expenses.
These comparisons adjust for differences in age, income, and health status between the two programs, using propensity-score weighting; without those adjustments, the out-of-pocket gap was even larger.
BMA allies reacted to the new study:
“Beneficiaries with the greatest medical needs are often the most exposed when healthcare costs climb, and Medicare Advantage helps protect them from expenses that would otherwise consume much of their income,” said Mike Cheek, President and CEO, SNP Alliance. “Special Needs Plans do even more for the most complex beneficiaries, including dual eligible individuals, coordinating their care and shielding them from out-of-pocket costs they simply cannot absorb.”
“Our members — the multispecialty medical groups and integrated systems that care for one in three Americans — know affordability and good care go hand in hand,” said Jerry Penso, MD, President and CEO, American Medical Group Association. “Medicare Advantage is helping seniors, particularly those with lower incomes and complex needs, manage the cost of their care — that’s a model we need to protect.”
“For patients and families, affordability isn’t abstract — it often decides whether they can follow their care plan without falling into financial hardship,” said Rebecca Kirch, Executive Vice President, Policy & Programs, National Patient Advocate Foundation. “We need to ease the burden for the seniors who feel it most, and that’s the kind of patient-centered value we should be building on.”
“For older adults on fixed incomes — especially in rural communities where resources can be harder to reach — every dollar saved on healthcare is a dollar that can go toward food and other essentials,” said Bob Blancato, Executive Director, National Association of Nutrition and Aging Services Programs. “These findings show Medicare Advantage is helping seniors keep more of their income for the things that keep them healthy and independent, and that’s a difference worth protecting.”
Read the full analysis from ATI Advisory here.
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Better Medicare Alliance is a community of hundreds of thousands of grassroots beneficiaries and 200+ ally organizations working to improve healthcare through a strong Medicare Advantage. Learn more at bettermedicarealliance.org.