The cost of privatization: extra payments to Medicare Advantage plans--updated and revised.

Brian Biles, Lauren Hersch Nicholas, Barbara S. Cooper, Emily Adrion, Stuart Guterman

Research output: Contribution to journalArticle


The Medicare Modernization Act of 2003 sharply increased payments to private Medicare Advantage plans. As a result, every plan in every county in the nation was paid more in 2005 than its enrollees would have been expected to cost if they had been enrolled in traditional fee-for-service Medicare. The authors calculate that payments to Medicare Advantage plans averaged 12.4 percent more than costs in traditional Medicare during 2005: a total of more than $5.2 billion, or $922 for each of the 5.6 million Medicare enrollees in managed care. This issue brief updates an earlier analysis of Medicare Advantage payments in 2005 previously published by The Commonwealth Fund; the updated estimates in this report are based on final 2005 enrollment figures that were not available at the time the previous estimates were developed, and they include the effect of policy decisions that were not reflected in the previous estimates.

Original languageEnglish (US)
Pages (from-to)1-16
Number of pages16
JournalIssue brief (Commonwealth Fund)
StatePublished - Nov 2006
Externally publishedYes


ASJC Scopus subject areas

  • Medicine(all)

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