UnitedHealth Group commissioned Milliman to analyze the value to the federal government of the Medicare Advantage (MA) program relative to traditional Medicare for 2026. This is an update to a prior analysis that studied 2025. We estimated the value of the MA program to the government by calculating the average government spending for MA beneficiaries, compared with average government spending for traditional Medicare beneficiaries.
The use of managed care strategies is the primary difference between traditional Medicare and MA. Traditional Medicare comprises Medicare Part A and Part B and covers medical services such as hospital care, office visits, preventive services, and some medical supplies. Traditional Medicare does not cover prescription drugs (Part D) or supplemental benefits, but beneficiaries may purchase coverage separately.
MA (Part C), offered by private health insurers, is required to cover everything that traditional Medicare covers, and often offers additional benefits, such as vision, dental, hearing, and prescription drug coverage. Because MA is a managed care program, plans implement additional utilization management strategies that are not typically seen in traditional Medicare. The primary goals of these features are to keep expected costs for Part A and Part B services at or below those of traditional Medicare, to increase the quality of beneficiary care, and to help avoid unnecessary or duplicative services.
In our analysis, we found government spending for MA beneficiaries in 2026 is estimated to be approximately 95% of—or 5% lower than—government spending for traditional Medicare beneficiaries. Topics discussed included the following.
- Background: Medicare coverage options, MA payments and bids, rebates, and traditional Medicare spending versus MA payments
- Estimating government value: A comparison of payments, benefits, and services
- Sensitivity testing: Examining impacts from risk score coding differentials between MA and traditional Medicare
This report was commissioned by UnitedHealth Group.