The Medicare Advantage Organization

Private Insurance for Medicare, and 50% of Beneficiaries Have Chosen It

In 2025, more than half of all Medicare beneficiaries are enrolled in Medicare Advantage — private insurance plans that contract with CMS to provide all Medicare benefits. That’s a staggering shift from even 10 years ago.

What It Is

An MA organization is a health plan that receives a fixed monthly payment from CMS for each enrolled beneficiary and provides all Medicare Part A and B benefits. It bears full insurance risk. Many MA plans add supplemental benefits — dental, vision, hearing, gym memberships — to attract enrollment.

Why It Exists

Traditional Medicare is fee-for-service with no care coordination infrastructure. MA plans use managed care tools — provider networks, prior authorization, case management — to coordinate care and manage costs. The capitated payment model creates an incentive to keep people healthy.

When a health system owns its own MA plan (Kaiser, UPMC, Geisinger), it controls both the insurance premium and the delivery system. That’s maximum alignment.

The Tradeoffs

The upside: Full capitation incentivizes prevention. Supplemental benefits attract beneficiaries. Provider-owned MA creates total payer-provider alignment.

The downside: Prior authorization is a constant source of friction. Risk adjustment coding incentives create upcoding concerns. MA plans cost CMS more per beneficiary than traditional Medicare, which is politically contentious.

The Bottom Line

MA is the single most consequential trend in Medicare. Over half of beneficiaries have chosen it. It’s restructuring the economics of healthcare delivery for seniors. But the overpayment question — does CMS pay MA plans more than traditional Medicare would have cost? — is the political time bomb.