For-Profit Medicare Plans Cost 11 Percent More Than Traditional Medicare

Medicare advantage (formerly Medicare + Choice) plans are private for-profit plans that administer Medicare benefits. Given a big boost by the 2003 Medicare drug bill, supporters argued that competition and businesslike efficiency of these plans would drive down costs. In fact, the reverse is true. Private plans enrolled only cheap, healthy seniors and dumped the rest on the traditional program. The result has been large overpayments by Medicare to the private plans. This latest report from MedPac finds private plans are paid an average of 111 percent of what it would have cost to treat their beneficiaries in traditional Medicare.

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