A new white paper by scholars from the USC Schaeffer Center for Health Policy & Economics recommends a competitive bidding model that bases Medicare Advantage rates on market forces and delinking rates from traditional Medicare costs. The paper also recommends plan standardization and providing beneficiaries with more transparent plan information for comparison.

Medicare Advantage is highly popular, with 55% of Medicare beneficiaries — 33.2 million people — enrolling in federally approved private health plans over traditional, government-run Medicare. Behind this popularity, however, is a flawed payment model that pays these private plans an average of $2,329 more per beneficiary than what spending would have been in traditional Medicare.

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