Basics
Medicare Advantage: How it Works, How it’s Financed, and What’s Next?
Health Care
Published on May 26, 2026
Explore This BasicMedicare Advantage, also known as Medicare Part C, is a core part of the Medicare program in which the federal government partners with private health insurance companies to provide benefits to those eligible for Medicare. In recent years, enrollment in the program has increased significantly, with over half of Medicare beneficiaries (about 54%) choosing Medicare Advantage over “traditional” Medicare in 2025.
Medicare Advantage was created with the goal of introducing competition and choice into the Medicare program, with the anticipated benefit of reducing costs and improving benefits for the enrollee. Medicare Advantage plans often offer additional benefits compared to traditional Medicare, such as lower cost sharing (often eliminating the need for a Medigap plan), dental, vision, and hearing coverage, prescription drugs, over-the-counter medications, transportation, and wellness programs.
- AHA: Skyrocketing Hospital Administrative Costs, Burdensome Commercial Insurer Policies Impacting Patient Care
- AHIP: Medicare Advantage Demographics
- AHIP: Medicare Advantage Leads to Savings for Seniors and Taxpayers
- AHIP: Fewer Options, Higher Costs Due to Consecutive Years of Inadequate Rates
- AHIP: Market Signals Indicate Long-Term Threats to Affordability, Plan Choices for Seniors
- AHIP: Medicare Advantage Delivers Higher-Quality Care at a Lower Cost than Fee-for-Service Medicare
- AHIP: New Analysis Shows Medicare Advantage Outperforms Fee-for-Service Medicare in Improving Patient Outcomes, Delivering Care at a Lower Cost
- AHIP: Prior Authorization: Selectively Used & Evidence-Based
- AHIP: The False Tell on MLR “Gaming”
- Better Medicare Alliance: Analysis of the 2026 Medicare Advantage Plan Landscape
- Better Medicare Alliance: Medicare Beneficiary Spending Brief 2025
- Better Medicare Alliance: New Battleground Polling Shows Seniors Strongly Oppose Medicare Advantage Cuts, Underscoring Broad Concern Over No UPCODE Act
- Better Medicare Alliance: State of Medicare Advantage 2025
- CMS: Medicare Advantage Part D Star Ratings
- CMS: Star Ratings Fact Sheet
- Center for Medicare Advocacy: Overpayments to Medicare Advantage in 2026: $76 Billion
- Commonwealth Fund: How Risk Adjustment Affects Payment For Medicare Advantage Plans
- Commonwealth Fund: Medicare Advantage: A Policy Primer
- Commonwealth Fund: What Do Medicare Beneficiaries Value About Their Coverage?
- Federation of American Hospitals: FAH letter of support MA Prompt Pay Act 2025
- Federation of American Hospitals: STATEMENT of the Federation of American Hospitals to the U.S. House Committee on Ways and Means “Hearing with Health Insurance CEOs”
- Federation of American Hospitals: STATEMENT of the Federation of American Hospitals to the U.S. House of Representatives Committee on Ways and Means Re: “Medicare Advantage: Past Lessons, Present Insights, Future Opportunities”
- Health Affairs: How Insurers That Own Providers Can Game The Medical Loss Ratio Rules
- Health Affairs: Medicare Advantage At 25 Years: Reclaiming A Public Purpose
- Health Affairs: Inside The Meteoric Rise Of Medicare Advantage
- HealthScape Advisors| Medicare Advantage 2026: Enrollment depicts industry at a crossroads
- HHS Office of the Inspector General: Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care,
- Inovalon: Medicare Advantage vs. Traditional Fee-forService Medicare: Different Populations, Different Outcomes
- KFF: Medicare Advantage 2026 Spotlight: A First Look at Plan Premiums and Benefits
- KFF: Medicare Advantage Insurers Made Nearly 53 Million Prior Authorization Determinations in 2024
- KFF: A Snapshot of Sources of Coverage Among Medicare Beneficiaries
- MedPAC: MA Payment Basics
- MedPAC: MedPAC 2026 Report to Congress
- MedPAC: MedPAC 2024 Report to Congress
- NORC at the University of Chicago: Analysis of Hospital Discharges to PAC Settings Among Medicare Beneficiaries
- Premier Inc.: Claims Adjudication Costs Providers $25.7 Billion – $18 Billion is Potentially Unnecessary Expense
- Premier Inc.: Trend Alert: Private Payers Retain Profits by Refusing or Delaying Legitimate Medical Claims