March, 14 2024, 12:06pm EDT

Medicare Advantage Myth-Busting
This year, the majority of Americans eligible for Medicare coverage chose to enroll in private Medicare Advantage (MA) plans rather than Traditional Medicare. Insurance companies that run these MA plans spend significant sums of money to blanket seniors with marketing that highlights the supposed advantages of MA like low upfront costs, supplemental coverage, and other unique perks like subsidizing gym memberships. However, the ads leave seniors in the dark on the downsides of MA like heavily restricted networks that damage one’s choice of provider along with dangerous delays and denials of necessary care. At the same time, both the Biden Administration and many members of Congress from both parties have voiced support for the further privatization of Medicare through growing Medicare Advantage.
In this article, we will debunk several pervasive myths about MA that proponents and insurance giant owners push in their effort to continue privatizing Medicare at the expense of patients.
Myth #1: Medicare Advantage Is Medicare
The inclusion of the term Medicare in Medicare Advantage — otherwise known as Medicare Part C — is incredibly misleading, as the program is de facto government-subsidized private insurance.
Traditional Medicare is public insurance, where tax revenues are directly used to cover healthcare for seniors and some disabled people. It employs a fee-for-service (FFS) payment model, where the Centers for Medicare and Medicaid Services (CMS) directly pays for each covered service by a healthcare provider.
In contrast, MA consists of thousands of different plans mostly provided by health insurance giants like UnitedHealthcare and Humana. Seven large insurance companies accounted for 84% of MA plan enrollment in 2023. Rather than directly covering care as needed, the federal government pays lump sum Medicare dollars, known as capitated payments, to these private insurers for each patient. MA plans make money by spending as little as possible on patient care in order to keep as much of the leftover taxpayer money as possible.
In other words, MA is private insurance supported by government subsidies, and it is a form of managed care by health insurance companies. MA is not a government-managed public health insurance program like Traditional Medicare.
Myth #2: Medicare Advantage Saves Money
Medicare Advantage has never saved taxpayers money as a substitute for Traditional Medicare. In fact, according to the Medicare Payment Advisory Commission (MedPAC), taxpayers have spent more on financing MA than they would have if everyone was covered under Traditional Medicare.
In fact, Congress and CMS have been working to try to stop MA companies from gaming the system to steal taxpayer money. A 2023 study by the Physicians for a National Health Program (PNHP) estimates that CMS overpaid MA plans between $88-$140 billion in 2022 alone through various practices like pretending patients were sicker than they were along with targeting healthier, less costly seniors to enroll in their plans. Overpayments have also caused all Medicare beneficiaries to pay billions in higher Medicare Part B premiums.
Through taking taxpayer subsidies, MA has been significantly more profitable for insurance companies than the private plans offered to the rest of Americans. In 2021, MA companies had a gross profit margin of $1,730 per enrollee, which is more than double their profit margin on the individual market ($745). In 2023, Humana ended its entire commercial insurance business in order to entirely focus on government-funded programs like MA.
Some who claim MA saves money point to how MA spending is growing at a slower rate than Traditional Medicare. However, their point assumes that people enrolled in MA and Traditional Medicare share the same characteristics, which is false. MA targets and enrolls people who are healthier, less likely to use medical services, and, thus, less expensive to cover than those in Traditional Medicare.
Myth #3: Medicare Advantage Is Necessary To Save Beneficiaries Out-of-Pocket Spending
One of the primary appeals of Medicare Advantage is the idea that it saves beneficiaries money. However, this is highly dependent on how much care someone needs. The extent to which MA does save money for patients is not a natural result of its supposed superiority; it is due to intentional political sabotage and decision making.
Patients in both MA and Traditional Medicare have to pay a monthly premium for Medicare Part B ($174.40 in 2024). Then, Traditional Medicare covers 80% of costs for outpatient services. Beneficiaries are responsible for paying the remaining 20%, with no limit on out-of-pocket (OOP) payments. However, Traditional Medicare fully covers inpatient services such as hospitalization after a patient meets a deductible ($1,632 in 2024). For prescription drug coverage, Traditional Medicare beneficiaries pay a monthly premium for a Medicare Part D plan run by a private insurer ($40 average in 2023).
Traditional Medicare beneficiaries can purchase a supplemental Medigap insurance plan to cover most OOP spending (average monthly premium of $139 in 2023), which a plurality (41%) did in 2021. Eighty-nine percent of people in Traditional Medicare had some form of supplemental coverage in 2023, such as through Medicaid (19%) or their employer/union (31%).
In MA, premiums, coinsurance rates, and deductibles vary across the thousands of different plans. However, the average monthly premium is very low ($18.50 estimate for 2024), and many plans have $0 premiums. Additionally, CMS mandates that MA plans have an OOP spending limit. The average limit for in-network services was $4,835 in 2023; when accounting for both in- and out-of-network services, the average limit was $8,659. Ninety-seven percent of MA beneficiaries are in plans that incorporate drug coverage, and the average premium is $10 per month (73% of enrollees had no premiums for drug coverage).
For healthy individuals without need of expensive healthcare services and products, MA saves money due to its low premiums. However, while Traditional Medicare users with a Medigap plan spend more money upfront due to higher premiums, they can save thousands of dollars for expensive care that would reach their OOP limit if they were enrolled in MA.
However, many seniors simply cannot afford purchasing a Medigap plan, so they have little choice but to enroll in MA. In 2023, 52% of MA beneficiaries earned annual incomes around $25,000. Income limitations disproportionately lead Blacks (65%) and Latinos (69%) to choose MA compared to Whites (48%), as 78% and 81% of Black and Latino MA beneficiaries earn less than 200% of the federal poverty level, respectively.
Traditional Medicare beneficiaries without any form of supplemental coverage (11% of Traditional Medicare users in 2021) most certainly have to pay more for healthcare due to Part A deductible and the lack of any OOP cap. However, the lack of an OOP cap in Traditional Medicare is entirely a result of politics and can be changed. While CMS requires MA plans to have an OOP cap, policymakers have elected not to create one for Traditional Medicare. Congress could legislate a $5,000 OOP cap for Traditional Medicare; this would cost just $39 billion annually or just 28-44% of the overpayments made to MA plans in 2022.
Considering the fact that MA has never saved taxpayer money, the history of billions of dollars in overpayments to MA plans, and the fact that Congress could cost-efficiently lower costs for those in Traditional Medicare, it is a myth that MA is necessary to save patients money.
Myth #4: Medicare Advantage Improves Health Outcomes
Through incentivizing the use of preventative care, Medicare Advantage’s capitated payment model should supposedly increase the health of its beneficiaries. However, there is not sufficient evidence to prove this. Additionally, the sickest patients opt for Traditional Medicare and low reimbursement rates decrease the willingness of healthcares providers to accept MA patients.
The Kaiser Family Foundation (KFF) reviewed existing studies and found that there is not strong evidence of widespread significant differences in health outcomes between Americans enrolled in MA versus Traditional Medicare. MA plans push patients to more preventative care visits, and they also incentivize beneficiaries to take on healthy habits like getting and using a gym membership. In contrast, Traditional Medicare is more likely to send its beneficiaries to higher-rated cancer facilities, nursing facilities, and home health agencies. Issues with data quality and differences in the populations who choose MA versus Traditional Medicare also render direct comparisons between the two programs quite weak.
Incentivized to spend as little as possible, MA plans pay healthcare providers less than Traditional Medicare. As a result, an increasing number of doctors and providers are declining to accept MA patients, further restricting MA networks and access to care. Additionally, lower payments can prevent doctors from providing the best quality care. In comparison, around 99% of non-pediatric physicians accept Traditional Medicare.
Medicare Advantage is a great option for relatively healthy beneficiaries who do not expect to need intensive care for serious illnesses and injuries. Capitated payments do incentivize MA insurance companies to save money by investing in healthy, preventative care and programs. At the same time, the model also incentivizes MA plans to avoid covering the highest quality care for the people most in need.
To restrict care that beneficiaries would otherwise receive in Traditional Medicare, MA companies delay and deny care through prior authorizations (PAs) and payment denials. In 2021, patients and their providers had to file 35 million PA requests in order to receive medical care. MA companies denied 2 million of these requests. People only bothered to appeal 11% of the time; however, those that did had a 82% success rate. In 2022, 94% of physicians surveyed by the American Medical Association reported experiencing PAs which caused delays to necessary care; 56% reported this occurring always or often. Eighty percent reported that PAs caused the abandonment of recommended treatment, and 33% reported that they caused a serious adverse event for their patients.
There are many reasons for poor health outcomes in the United State: lack of healthcare access, high costs, low income, poor diet, and lack of exercise to name a few. The strategy of giving lump sums of money — mostly to insurance giants — and incentivizing them to spend as little as possible is not supported with evidence of improved health outcomes and does not directly tackle these greater issues.
Myth #5: Medicare Advantage Offers Benefits That Traditional Medicare Simply Cannot Match
A primary selling point of MA plans is that they offer supplemental benefits — mainly coverage for dental, vision, and hearing care — that Traditional Medicare does not provide. While this is true, it is misleading because it does not reveal the quality of this coverage.
While the vast majority of MA plans offer supplemental benefit coverage, there isn’t evidence that their beneficiaries actually utilize dental, hearing, and vision services much more than people enrolled in Traditional Medicare. In fact, there is some evidence to the contrary regarding dental care. This is because MA supplemental “coverage” does not protect patients from having to spend significant sums of money out of their own pockets.
Most MA plans have high coinsurance rates along with low annual caps on how much insurance will cover. So, MA coverage predominantly doesn’t help patients with expensive dental, hearing, or vision treatments. This prevents many seniors from being able to afford care even though they technically have coverage. Ultimately, MA plans constantly advertise that they offer supplemental coverage, but they leave Americans in the dark on how little financial help they will actually receive.
Additionally, taxpayers and Traditional Medicare beneficiaries are effectively subsidizing these additional benefits. Not only has MA never saved taxpayer money, it is further depleting the Medicare Trust Fund and raising Part B premiums for all Medicare beneficiaries. These higher premiums and taxpayer overpayments allow MA companies to market supplemental benefits along with the aforementioned low premiums which attract healthier and lower-income seniors.
Instead of enriching MA companies, Traditional Medicare could provide dental, hearing, and vision benefits for less than $42 billion in 2025, which is 30-48% of the overpayments taxpayers made to MA in 2022. Unlike in MA, this coverage would not be limited to restricted provider networks.
Myth #6: Medicare Advantage Is Necessary To Lower Healthcare Spending
Healthcare spending overall and Medicare spending specifically increase every year more than inflation. The United States spends more money per capita than any other country on healthcare. The average cost of healthcare per person in other wealthy nations is roughly half as much as the United States.
To lower Medicare spending, proponents of Medicare Advantage tout the benefits of “value-based” care compared to Traditional Medicare’s FFS model. Critics claim that FFS incentivizes wasteful spending and opportunities for doctors to become rich by billing Medicare for services unnecessary to patient health.
In contrast, “value-based” care involves CMS giving lump sums of money (capitated payments) to MA companies for each patient, supposedly incentivising efficient healthcare spending on preventative care. Through spending less and, ideally, keeping patients healthier, MA companies get to keep more money.
While there are case studies of mission-driven organizations succeeding with capitated payments, this does not hold true for the large, for-profit insurance giants that dominate MA. Rather, the major MA companies’ primary goal is to maximize profit. Therefore, they typically take as much taxpayer money as feasible by gaming the system while restricting care in order to spend less and keep as much as possible.
However, the entire premise that reducing healthcare usage with a more restrictive insurance policy is the best means to lower healthcare spending is baseless. The United States does not use healthcare services more than the other countries who spend far less, and the same is true for Medicare compared to similar foreign populations.
Then why is healthcare so expensive in the United States? Prices. Healthcare prices in the United States are significantly higher than other countries. This reality is a result of factors like market consolidation (lack of competition), patents, administrative waste, and more.
Rather than combat the large hospitals, pharmaceutical companies, private equity companies, insurance giants, and other powerful private interests who control armies of lobbyists and excesses of campaign cash, MA proponents provide a simple solution: make people get less care. This is a convenient solution which happens to also further enrich and get the blessing of dominant insurers like UnitedHealth Group.
All in All, Medicare Advantage Is a Scam
Congress created Medicare Advantage with the 2003 Medicare Prescription Drug Improvement and Modernization Act (MMA). After signing the bill into law, President George W. Bush boasted how MA would lower costs, expand benefits, afford seniors more choices, and improve quality of care. However, this supposed modernization of Medicare was really a scheme to privatize, gifting billions of dollars to insurance companies while seeking to end Traditional Medicare.
In reality, MA has never saved taxpayer money. Through gaming the system of capitated payments, MA insurance companies have reaped billions in overpayments — which have also increased the amount all Medicare beneficiaries pay in Part B premiums.
Through restricting care and taxpayer subsidies, MA plans do offer a lower cost alternative to Traditional Medicare, especially for beneficiaries who cannot afford a supplemental Medigap plan. Additionally, it can offer supplemental benefit coverage unavailable under Traditional Medicare, even if the quality of such coverage is poor and provides limited financial support. However, this reality is not because of its inherent design; it is a result of the political sabotage of Traditional Medicare. Congress can cap OOP expenses and provide supplemental coverage for Traditional Medicare with the same money it overpays to MA insurance giants lining their profit margins.
The only choices MA afforded seniors has been which private plan they want to choose. The program destroys beneficiaries’ choice of doctor due to restricted networks. Additionally, there is not sufficient evidence that MA significantly improves health outcomes while health providers are increasingly dropping MA plans due to low reimbursements, further limiting the number of providers MA patients can see. At the same time, current comparisons between MA and Traditional Medicare are unfair as long as policy makers refuse to fix the cost gaps in the latter.
Within both the Medicare and entire American populations, healthcare costs are rising at the same time as health outcomes are worsening, especially in comparison to peer nations. While MA is a convenient solution for insurance companies, it neither addresses the causes of high prices nor poor health outcomes.
MA proponents consistently point to the increasing share of beneficiaries who choose MA over Traditional Medicare as evidence of success. Along with millions of dollars spent on deceptive advertising by insurance companies, this is the consequence of policymaker’s failure to update Traditional Medicare.
It’s past time Medicare beneficiaries are given a real choice. Instead of overpaying insurance giants to the tune of hundreds of billions of dollars, Congress can cap OOP expenses at $5,000 annually and provide supplemental benefits in Traditional Medicare.
The Center for Economic and Policy Research (CEPR) was established in 1999 to promote democratic debate on the most important economic and social issues that affect people's lives. In order for citizens to effectively exercise their voices in a democracy, they should be informed about the problems and choices that they face. CEPR is committed to presenting issues in an accurate and understandable manner, so that the public is better prepared to choose among the various policy options.
(202) 293-5380LATEST NEWS
'For the Workers, Not the Billionaires': Bernie Sanders to Join Nationwide Rallies for May Day
"Bernie knows that when the working class—labor, immigrants, community members—stand together, we are force that can defeat any bad boss," said the Philadelphia chapter of the AFL-CIO.
Apr 29, 2025
As U.S. Sen. Bernie Sanders continues his nationwide Fighting Oligarchy tour, the longtime economic justice advocate is joining forces with organizers of another major mass mobilization against the "Billionaire Agenda" that has left working families struggling to afford healthcare, education, and the rising cost of living.
On Thursday, one of more than 1,100 May Day rallies will be held at Philadelphia City Hall, where Sanders (I-Vt.) will join the city's AFL-CIO chapter under the banner, "For the Workers, Not the Billionaires."
Announcing that Sanders will speak at the rally at 4:00 pm Thursday, the union said on Facebook that "Bernie knows that when the working class—labor, immigrants, community members—stand together, we are force that can defeat any bad boss... When workers fight, workers win!"
As Common Dreams reported last week, labor unions and advocacy groups are planning rallies in nearly 1,000 cities across all 50 states to mark May 1 or May Day, which commemorates the struggles and victories of the labor movement throughout history.
The events are taking place more than two months into Sanders' Fighting Oligarchy tour, during which he and Rep. Alexandria Ocasio-Cortez (D-N.Y.) have drawn crowds of thousands in Republican districts in Nebraska, Iowa, Idaho, and other states—addressing a total of 250,000 people, about a third of whom are not registered Democrats, according to Sanders' office.
Advocates say the tour has demonstrated the broad appeal of the progressive lawmakers' prioritizing of issues that impact working families, their demand that the Democratic Party aggressively fight the Trump agenda in any way that they can, and their rejection of billionaires' and corporations' encroachment on the U.S. political system and hoarding of wealth.
Like the Fighting Oligarchy tour, the May Day 2025 rallies aim to "unite working people across race, immigration status, and geography," according to organizers, with attendees demanding:
- An end to the billionaire takeover and government corruption, including tech mogul Elon Musk's spearheading of efforts to slash hundreds of thousands of federal jobs and dismantle agencies;
- Full funding for public schools, healthcare, and housing;
- Protection and expansion of Medicaid, Social Security, and other essential programs that have been attacked by Musk and Trump;
- A halt to attacks on immigrants, Black, Indigenous, trans, and other targeted communities; and
- Strong union protections, fair wages, and dignity for all workers.
After the May Day rally, Sanders is expected to hold events in Harrisburg and Bethlehem, Pennsylvania—located in two of the state's most competitive swing districts that are represented by Republican Reps. Scott Perry and Ryan Mackenzie.
Keep ReadingShow Less
Trump 'Took a Hatchet' to Major US Climate Report by Dismissing All Its Authors
"The only beneficiaries of disrupting or killing this report are the fossil fuel industry and those intent on boosting oil and gas profits," said one person who was working on the 6th National Climate Assessment.
Apr 29, 2025
Hundreds of scientists and experts working on the National Climate Assessment were dismissed by the Trump administration via email on Monday, casting doubt on the future of the federal government's flagship climate report, which was slated to come out by 2028.
On Monday, those working on the 6th version of the report received an email from the Trump administration that the scope of the assessment is being "reevaluated in accordance with the Global Change Research Act of 1990"—in reference to the legislation that mandated the creation of the National Climate Assessment.
"We are now releasing all current assessment participants from their roles," continued the email, the text of which was included in a Monday statement from the group the Union of Concerned Scientists.
"Today, the Trump administration senselessly took a hatchet to a crucial and comprehensive U.S. climate science report by dismissing its authors without cause or a plan," said Dr. Rachel Cleetus, a senior policy director at the Union of Concerned Scientists and an author for the 6th National Climate Assessment (NCA) on the coasts chapter, said on Monday. "People around the nation rely on the NCA to understand how climate change is impacting their daily lives already and what to expect in the future. While not policy prescriptive, the findings of previous reports underscore the importance of cutting heat-trapping emissions and investing in climate resilience to protect communities and the economy."
"The only beneficiaries of disrupting or killing this report are the fossil fuel industry and those intent on boosting oil and gas profits at the expense of people's health and the nation's economic well-being," added Cleetus.
Since entering office, Trump has signed executive orders aimed at bolstering oil, gas, and coal and installed Cabinet members with ties to the fossil fuel industry.
The assessment, which is required by Congress, has been released every few years since 2000 and gives a rundown of how global warming is impacting different sectors of the economy, ecosystems, and communities. The energy and environment focused outlet E&E Newsreported Tuesday that the report is "seen by experts as the definitive body of research about how global warming is transforming the country."
The report last came out in 2023. That National Climate Assessment established that the "effects of human-caused climate change are already far-reaching and worsening across every region" of the United States. The report's authors warned that absent deeper cuts in fossil fuel emissions and accelerated adaption efforts compared to what's currently underway, "severe climate risks to the United States will continue to grow."
Earlier in April, the Trump administration enacted cuts to the U.S. Global Change Research Program, which oversees the production of the National Climate Assessment.
Keep ReadingShow Less
'This Will Gut the FTC': Republicans Push Musk-Backed Plan to Kill Key Antitrust Law
"Jim Jordan and House Judiciary Republicans are directly undermining both current and future litigation against the monopolies that gouge and censor Americans."
Apr 29, 2025
House Republicans are set to consider legislation on Wednesday that experts say would effectively eliminate a law that gives the Federal Trade Commission sole authority to protect the American public from corporations engaging in "unfair methods of competition."
The GOP-controlled House Judiciary Committee, led by Rep. Jim Jordan (R-Ohio), released the bill Monday as part of a sweeping, filibuster-proof reconciliation package that Republicans are looking to pass as soon as next month.
The new bill states that "all FTC antitrust actions, all FTC antitrust employees, all FTC antitrust assets, and all FTC antitrust funding" must be "transferred to the attorney general." The proposal is virtually identical to Republican legislation that Elon Musk, a lieutenant of President Donald Trump and the richest person in the world, endorsed earlier this year.
Matt Stoller, research director at the American Economic Liberties Project, observed Monday that the House Judiciary Committee measure is "not just a bill to change the office locations and reporting structures." Specifically, Stoller noted that the bill doesn't explicitly transfer to the Justice Department the FTC's authority under Section 5 of the Federal Trade Commission Act to combat "unfair methods of competition."
"That authority," Stoller wrote, "remains with an agency that has no staff and no capacity to litigate, which means it could die."
Alvaro Bedoya, who is currently engaged in a legal fight to get his job back at the FTC after Trump fired him and another Democratic commissioner last month, echoed Stoller's concerns, writing on social media that the Republican bill "doesn't transfer the laws that FTC enforces, or authority to enforce those laws."
"This will gut the FTC," Bedoya wrote, noting that the agency's legal action against pharmacy benefit managers—pharmaceutical industry middlemen—would likely be among the casualties of the Republican bill, given that "the sole law that the FTC alleges was broken in all three counts was that core prohibition against 'unfair methods of competition.'"
Stoller pointed out in his blog post that Section 5 is also used "in the antitrust case against Amazon" and "another case against Corteva/Syngenta over exclusive dealing in seeds and chemicals." It was also "the authority used to ban noncompete agreements," he wrote.
"These cases, as well as every consent decree ever reached under Section 5, are now at risk," Stoller added.
The House Judiciary Committee is slated to mark up the legislation on Wednesday afternoon, starting at 2:00 pm ET.
Lisa Gilbert, co-president of Public Citizen, said in a statement Monday that the measure as a whole is "laden with language attempting to protect corporate wrongdoers."
"One provision appears to effectively eliminate the FTC pro-competition division," said Gilbert. "Another set of provisions makes significant changes to the already overreaching Congressional Review Act. One measure says that major rules that raise revenue go into effect only if Congress proactively approves them. Another section says for the next four years Congress has to affirmatively approve rules for them not to expire."
"If made law," she warned, "this would sign a death warrant for a slew of important consumer, worker, and environmental protections."
Keep ReadingShow Less
Most Popular