Taxpayers spend 22% more per patient to support Medicare Advantage – the private alternative to Medicare that promised to cost less

Medicare Advantage was supposed to find efficiencies, but instead is costing taxpayers an extra $83 billion a year. Ariel Skelley/DigitalVision via Getty Images by Grace McCormack, University of Southern California and Erin Duffy, University of Southern California Medicare Advantage – the commercial alternative to traditional Medicare – is drawing down federal health care funds, costing taxpayers an extra 22% per enrollee to the tune of US$83 billion a year. Medicare Advantage, also known as Part C, was supposed to save the government money. The competition among private insurance companies, and with traditional Medicare, to manage patient care was meant to give insurance companies an incentive to find efficiencies. Instead, the program’s payment rules overpay insurance companies on the taxpayer’s dime. We are health care policy experts who study Medicare, including how the structure of the Medicare payment system is, in the case of Medicare Advantage, working against taxpayers. Medicare beneficiaries choose an insurance plan when they turn 65. Younger people can also become eligible for Medicare due to chronic conditions or disabilities. Beneficiaries have a variety of options, including the traditional Medicare program administered by the U.S. government, Medigap supplements to that program administered by private companies, and all-in-one Medicare...