Milliman Study: Medicare Advantage Costs 9% Less, Saving $117 Monthly Per Enrollee
Milliman’s 2025 analysis estimates Medicare Advantage costs 9% less than traditional Medicare—$1,117 versus $1,234 per member monthly—saving $117 per enrollee. The study finds MA-PD beneficiaries spend 53% less—$3,651 versus $7,790 annually—and MA plans deliver $63 billion in additional benefits, reinforcing UnitedHealth’s Medicare Advantage growth potential.
1. ACA Subsidy Extensions Reinforce UnitedHealth’s Guidance
Following Senate approval of another round of Affordable Care Act subsidy extensions, UnitedHealth reaffirmed its full-year 2026 earnings guidance, projecting annual growth north of 12% compared with the trailing 12 months. The extended subsidies, originally set to expire at year-end, had pressured the company’s membership outlook and margin assumptions. UnitedHealth’s management noted that reinstatement of subsidies covering an estimated 15 million low-income enrollees removes a significant headwind for its Individual & Family Plan business, supporting retention rates above 90% and anticipated medical loss ratios in the low 80% range for 2026.
2. Senate Report Questions Medicare Advantage Coding Practices
A Senate Judiciary Committee probe, based on review of 50,000 pages of internal documents, concluded that UnitedHealth deployed nurses for in-home assessments, provided financial incentives to physicians, and used artificial intelligence tools to identify unreported diagnoses—all aimed at increasing Medicare Advantage risk scores and associated federal reimbursements. According to the report, these tactics collectively boosted payments by an estimated $1.2 billion over three years. UnitedHealth has publicly disputed characterizations of impropriety, emphasizing adherence to Centers for Medicare & Medicaid Services guidelines, but the stock fell 2.5% on the day the findings were released.
3. Independent Studies Affirm Medicare Advantage Savings
UnitedHealth announced two commissioned actuarial studies by Milliman projecting 2025 costs for Medicare Advantage versus traditional Medicare. The government’s average cost per member per month for traditional Medicare was estimated at $1,234, while Medicare Advantage costs averaged $1,117—a 9% savings equating to over $1,400 per member annually. Milliman also found that non-dual eligible beneficiaries in Advantage Prescription Drug plans spent $3,651 on total health care costs versus $7,790 under traditional Medicare with a standalone drug plan and Medigap Plan G, representing 53% lower out-of-pocket expenses. These findings support UnitedHealth’s positioning of Medicare Advantage as a value-driven growth engine, with over 34 million Americans enrolled and additional benefits funded through managed care savings.