Enrollment in Medicare Advantage has steadily increased over the past two decades. The number of MA enrollees grew from about 11 million (25% of total Medicare beneficiaries) in 2010 to 32 million (54% of Medicare beneficiaries) in 2024.
Now, new research from the Elevance Health Public Policy Institute found that the increase in Medicare Advantage enrollment is associated with lower total Medicare spending.
The Elevance study, published in INQUIRY: The Journal of Health Care Organization, Provision, and Financing, analyzed county-level Medicare spending and enrollment data (including Medicare Advantage, fee-for-service and Part D) from CMS from 2012 to 2021.
It found that a 10 percentage-point increase in Medicare Advantage penetration is associated with 1.5% lower total Medicare spending per capita, or $194. After adjusting risk scores to reflect the Medicare Payment Advisory Commission’s estimates of higher coding intensity in Medicare Advantage, there was 1.1% lower total Medicare spending per capita, or $146.
The researchers also found that between 2012 and 2021, increased Medicare Advantage enrollment is estimated to have saved $111 billion in total Medicare spending compared to if Medicare Advantage enrollment had stayed at 2011 levels. This number is $83 billion in savings with the coding intensity adjustment applied.
The report notes that one reason for these findings could be that as Medicare Advantage enrollment increases, providers may change “their behavior to align with MA plan incentives for quality and efficiency—such as chronic condition management and reduced utilization of costly services like advanced imaging—for all their Medicare patients, whether in FFS or MA.”
For Jennifer Kowalski, vice president of the Elevance Health Public Policy Institute, one of the key takeaways from this report is that one cannot assess what the Medicare fee-for-service program would look like without Medicare Advantage.
“It’s clear that Medicare Advantage plays an important role in the overall Medicare program,” she said in an interview. “And so at this point, I don’t think you can say here’s what fee-for-service would look like absent MA, because there is such an influence of MA. I think what this says is we really need to think about, how do we make the program sustainable and efficient and available to beneficiaries moving forward?”
The Elevance report comes as Medicare Advantage faces a lot of scrutiny in the healthcare industry. A recent MedPAC report found that Medicare Advantage payments in 2026 are $76 billion above what Medicare would have spent if MA enrollees were instead enrolled in fee-for-service.
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