Do Medicare Advantage Rebates Reduce Enrollees’ Out-of-Pocket Spending?

Lauren Nicholas, Shannon Wu

Research output: Contribution to journalArticle


The majority of Medicare Advantage (MA) plans receive payments that exceed their costs of providing basic Medicare benefits. There is controversy about whether these payments are passed on to the enrollees as supplemental benefits or are retained by plans. We used survey data on MA beneficiaries’ actual out-of-pocket (OOP) spending linked to MA payment information to test whether higher plan payments and rebates lowered enrollee OOP spending. We used instrumental variables regression models to address concerns that plan payments and rebates may reflect anticipation of enrollees with particular health-spending profiles. We found that beneficiaries recovered only $0.65 of every $1.00 in payments exceeding fee-for-service spending through lower OOP spending but more than fully recovered the value of the rebates supporting supplemental benefits.

Original languageEnglish (US)
JournalMedical Care Research and Review
Publication statusAccepted/In press - Jan 1 2018



  • managed care
  • Medicare Advantage
  • out-of-pocket spending
  • plan rebates

ASJC Scopus subject areas

  • Health Policy

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