A report released by the House Committee on Energy and Commerce examined 34 Medicare Advantage (MA) insurers, finding that the companies spent an average of 15 percent of premium revenue on profits, marketing and other administrative expenses, yielding an average “medical loss ratio” below 85 percent.  In contrast, traditional fee-for-service (FFS) Medicare spends less than 1.5 percent on non-medical expenses.  The report recommends requiring MA insurers to maintain medical loss ratios of 85 percent or greater and notes that such a restriction would have directed an additional $3 billion to MA medical care expenses between 2005 and 2008.

Full report: Profits, Marketing and Corporate Expenses in the Medicare Advantage Market (PDF | 182.4 KB)

U.S. House of Representatives Committee on Energy and Commerce Majority Staff. (2009). Profits, marketing and corporate expenses in the Medicare Advantage market. Prepared by Committee staff for Chairman Henry A. Waxman and Subcommittee Chairman Bart Stupak.