Milliman report finds that Medicare Advantage plans provides substantial cost savings to the federal government as well as subscribers.

“each dollar spent by the government on MA provides beneficiaries with
lower cost sharing and additional benefits than they would otherwise receive under Medicare FFS. Our analysis shows that, for beneficiaries in Medicare FFS, for each dollar of government costs almost 99% goes to expenses in Part A (hospital services) and Part B (physician services), with the remaining amount covering administrative costs. In contrast, for beneficiaries in MA, about 71% of each dollar of government costs goes to expenses for comparable Part A and Part B services. The remaining 29% of the payments, generated through “savings” described above, go to the reduction in cost sharing and additional benefits as described above, as well as to cover MA plan administrative costs and profit margins. The allocation of government payments for Medicare FFS and MA, respectively, are shown
in Figure 1.”

“Figure 2 summarizes … estimates of total program costs, separately for the government and the beneficiary, for Medicare FFS and MA coverage. The total government costs shown in Figure 2 are consistent with the totals from Figure 1.“

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