UnitedHealth Group commissioned Milliman to analyze the value to the federal government of the Medicare Advantage (MA) program relative to traditional Medicare for 2025. This is an update to a prior analysis completed in 2024. In our analysis, we estimated the value of the MA program to the government by quantifying what is provided for each dollar of government spending paid to MA plans, compared to each dollar of government spending for traditional Medicare. Because MA is a managed care program, MA plans have managed care features that are not typically seen in traditional Medicare. The primary goals of these features are to keep expected costs for Part A and Part B services at or below that of traditional Medicare, to increase the quality of beneficiary care, and to help avoid unnecessary or duplicative services.

• For beneficiaries in traditional Medicare, almost 99% of each dollar of government spending goes to expenses in Part A and Part B, with the remaining amount covering administrative costs.
• For beneficiaries enrolled in MA, about 71% of each dollar is for expenses for comparable Part A and Part B services, with an additional 17% of payments for the reduction in cost sharing and additional benefits as described above, 10% for other administrative costs, and 2% for profit margins.
• Government payments to MA plans in 2025 are estimated to be approximately 91% of government costs for traditional Medicare.
• The value of total program costs for 2025 in MA are 83% of those in traditional Medicare, and beneficiary costs in MA are 62% of those in traditional Medicare.

This report was commissioned by UnitedHealth Group.