Medicare Advantage (MA) enrollment has grown significantly since 2009, despite legislation that reduced what Medicare pays these plans to provide care to enrollees. This study examines changes in per-enrollee costs between 2009-2014 to better understand how MA plans have continued to thrive even as payments decreased. We found that, while spending per beneficiary in traditional Medicare rose 5.0 percent between 2009-2014, MA plans’ expected per-enrollee costs grew only 2.6 percent. In general, it appears that MA plans responded to lower payment by containing costs and preserving rebates, but the magnitude of this response varied by geographic area and plan type.
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