New Independent Studies: Medicare Advantage Delivers Greater Value to the Federal Government and Beneficiaries than Traditional Medicare

--(BUSINESS WIRE)--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.