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Medicare Advantage Outperforms Traditional Medicare in Resource Use and Quality of Care

Strategic Insights

— 2 min read

A recent study from the University of Minnesota has found that Medicare Advantage (MA) plans deliver health services more efficiently and with better quality of care than the traditional Medicare system. The research, published in the American Journal of Health Economics, analyzed data from 2016 to 2019 and discovered that MA plans reduced resource use by 12.8-17.5% compared to traditional Medicare. The study also found that quality of care, as measured by adverse health events and care process indicators, was better in MA plans than in traditional Medicare. Furthermore, the research showed that resource use reduction and quality improvement were larger among higher-risk MA patients.

Key Takeaways:

  • The study found that Medicare Advantage plans reduced total resource use by $206-$284 per beneficiary per month compared to traditional Medicare between 2016 and 2019.
  • The estimates of resource use reduction varied depending on the accounting method used to adjust for differences in coding intensity and patient characteristics between MA and traditional Medicare.
  • Quality of care, measured by adverse health events and care process indicators, was better in MA plans than in traditional Medicare.
  • Resource use reduction and quality improvement were larger among higher-risk MA patients.
  • The advantage of MA over traditional Medicare in reducing resource use decreased modestly between 2016 and 2019, and the advantage in improving quality of care decreased for one measure.
  • The study found that the type of MA plan and star ratings also affected resource use reduction and quality improvement.

Statistics:

  • Adjusted total resource use was $206-$284 (12.8-17.5%) per beneficiary per month lower in MA than in traditional Medicare between 2016 and 2019.
  • The estimates of resource use reduction varied depending on the accounting method used, with one method showing a reduction of $206 per beneficiary per month and another showing a reduction of $284 per beneficiary per month.
  • 12.8% to 17.5% of resource use was reduced in MA plans compared to traditional Medicare between 2016 and 2019.
  • 1 measure of quality of care showed that MA plans performed better than traditional Medicare, while another measure showed only a modest improvement.

Sources:

  • American Journal of Health Economics
  • Univ Chicago Press, 1427 E 60TH St, Chicago, IL 60637-2954, USA
  • Caroline Carlin, Dept. of Family Medicine and Community Health, School of Medicine, University of Minnesota, Minneapolis, MN, United States
  • Researchers' Work from University of Minnesota Focuses on Managed Care (Medicare Advantage Has Lower Resource Use and Better Quality of Care than Traditional Medicare). Health & Medicine Week. October 24, 2025; p 122.

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