Medicare Advantage Has Lower Resource Use and Better Quality of Care Than Traditional Medicare

Jeah Jung, Caroline Carlin and Roger Feldman

American Journal of Health Economics, 2025, vol. 11, issue 4, 628 - 667

Abstract: Medicare Advantage (MA) is a private alternative to publicly administered Traditional Medicare (TM). Whether private MA firms deliver Medicare services more efficiently than public TM coverage has long been an important inquiry. We use newly available national MA encounter data to compare resource use and quality of care between MA and TM. We find that adjusted total resource use is $206–$284 (12.8–17.5 percent) per beneficiary per month lower in MA than in TM between 2016 and 2019. The estimates vary depending on how we account for differences in coding intensity and patient characteristics between MA and TM. Quality of care, measured by adverse health events and care process indicators, is better in MA than in TM. Resource use reduction and quality improvement are larger among higher-risk MA patients. Resource use reduction and quality improvement also differ by MA plan type and star ratings. MA’s advantage over TM in reducing resource use decreased modestly between 2016 and 2019, and MA’s advantage in improving quality of care decreased for one measure.

Date: 2025
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