New Independent Studies: Medicare Advantage Delivers Greater Value to the Federal Government and Beneficiaries than Traditional Medicare
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medicare advantagemedical
Medicare Advantage is a type of health insurance plan offered by private companies that covers services traditionally provided by government-run Medicare. Think of it as a bundled package that combines hospital, doctor, and other medical care into one plan, often with added benefits. For investors, it matters because the popularity and profitability of these plans can influence healthcare companies and the broader health insurance industry.
traditional medicaremedical
Traditional Medicare is the government-run health insurance program that pays hospitals and doctors directly for covered services, mainly through its Part A (hospital) and Part B (medical) components. Think of it as a basic, pay-as-you-go public plan that sets standard prices and rules for care; it matters to investors because provider revenue, drug sales, and health-insurance strategies are shaped by its payment rates, coverage rules, and the large population it serves.
medigap plan gmedical
Medigap Plan G is a standardized Medicare supplement insurance policy that picks up most of the health care costs Original Medicare does not cover, such as hospital coinsurance and skilled nursing care co-pays, leaving only the Medicare Part B deductible as the beneficiary’s responsibility. Think of it as a top-up plan or safety net that reduces unpredictable medical bills. For investors, its popularity and pricing affect insurance company revenue, claim costs and the size of the retiree insurance market.
managed caremedical
A system in which health insurers, networks, or administrators coordinate who provides care, which services are covered, and how much is paid, often using rules, provider networks, and price negotiations to control costs and quality. Think of it like a subscription service that directs where you go and what is paid for; investors care because it shapes how much hospitals, doctors, drugmakers and device makers can charge, how quickly they get paid, and how many patients they can reach.
risk modelmedical
A risk model is a tool that combines historical data, rules and assumptions to estimate the chance and size of potential losses for an investment or portfolio. Like a weather forecast for money, it helps investors weigh tradeoffs, set limits, price risk and decide how to spread capital so a surprise event won’t cause bigger losses than expected.
centers for medicare & medicaid services (cms)regulatory
A federal agency that runs the United States' major public health insurance programs for older adults, people with disabilities, and low-income individuals. Investors watch its rules, reimbursement rates and coverage decisions because they directly affect the revenue and costs of healthcare providers, drug makers and medical device companies—like a referee whose calls change how the game is played and who scores.
out-of-pocket maximummedical
The out-of-pocket maximum is the most a person will pay in a year for covered medical care, after which their insurer pays 100% of further covered costs; think of it as a financial ceiling on your health bills. For investors, it matters because this cap influences employee disposable income, corporate benefit expenses and how much risk insurers or employers carry for large medical claims, affecting profits and cash flow.
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Actuarial describes the use of statistical and mathematical methods to estimate future costs, risks and probabilities related to events like insurance claims, retirements or loan defaults. For investors, actuarial analysis matters because it turns uncertain future outcomes into measured expectations and projected obligations—like using a weather forecast to plan a budget—helping evaluate a company’s financial stability, reserve adequacy and the fair value of risk-linked assets.
UnitedHealth Group today announced the release of two new, independent commissioned actuarial studies.
The findings, from the independent actuarial and research firm Milliman, using estimates of 2025 costs, summarize the value of Medicare Advantage (MA) both to the government and beneficiaries. Milliman found that:
MA costs the federal government 9% less than traditional Medicare.
MA out-of-pocket costs are 53% less than in traditional Medicare for a non-dual eligible aged-in beneficiary with a PDP and Medigap Plan G.
UnitedHealth Group is proud to work with policymakers and other stakeholders to protect and strengthen the MA program, and research like this is one of many ways the company demonstrates its commitment to care and lives its mission of helping people live healthier lives and making the health system work better for everyone.
Key Findings from Milliman’s 2025 Analysis:
Government Costs
Milliman estimated that in 2025, federal payments to MA plans were approximately 91% of — or 9% less than — the government’s costs for traditional Medicare, while using savings generated to fund additional benefits beyond traditional Medicare.
While traditional Medicare government costs are estimated to be $1,234 per member per month, the study found the estimated average government costs for MA (to offer the same medical benefits and use savings generated to fund additional benefits) are $1,117 per member per month. The $117 monthly savings amount to over $1,400 per member per year.
In addition, partly through savings generated by managed care, MA plans deliver $63 billion in additional annual value to enrollees through lower cost sharing, reduced premiums and enhanced supplemental benefits such as dental, vision and hearing coverage.
The latest findings include the continued phase-in of the V28 risk model from the Centers for Medicare & Medicaid Services (CMS) — which led to a 4% reduction in MA revenue compared to the V24 model.
The analysis credits MA’s managed care structure — which leverages provider networks, care coordination and value-based arrangements to improve efficiency and quality — as a key driver of these savings.
The Milliman report is available here and a related UnitedHealth Group brief that draws on Milliman’s findings is available here.
Beneficiary Savings
In a separate report, Milliman estimated an average non-dual eligible aged-in Medicare Advantage Prescription Drug (MA-PD) beneficiary spent 53% less on health care in 2025 compared to a similar beneficiary in traditional Medicare with a standalone drug plan (PDP) and Medigap Plan G.
The study found an average non-dual eligible aged-in MA-PD beneficiary’s total health care spending in 2025 was $3,651, compared to $7,790 under traditional Medicare with a PDP and Medigap Plan G. This included premiums and out-of-pocket cost sharing for medical, drug, dental, vision and hearing services.
MA-PD plans offer an annual out-of-pocket maximum, providing financial protection not available to beneficiaries in traditional Medicare, and nearly all MA-PD plans include supplemental benefits at little or no additional cost.
The Milliman report is available here and a related UnitedHealth Group brief that draws on Milliman’s findings is available here.
Broader Impact
More than 34 million Americans have chosen MA, and the program’s value is especially important as half of all Medicare beneficiaries have annual incomes below $43,200.
These findings reinforce that Medicare Advantage is a proven, cost-effective solution that delivers more value for both the federal government and the millions of Americans it serves.
About UnitedHealth Group
UnitedHealth Group is a health care and well-being company with a mission to help people live healthier lives and help make the health system work better for everyone through two distinct and complementary businesses. Optum delivers care aided by technology and data, empowering people, partners and providers with the guidance and tools they need to achieve better health. UnitedHealthcare offers a full range of health benefits, enabling affordable coverage, simplifying the health care experience and delivering access to high-quality care. Visit UnitedHealth Group at www.unitedhealthgroup.com and follow UnitedHealth Group on LinkedIn.
