There are people who believe Medicare is headed toward privatization. Privatization of Medicare could have various pros and cons.
The debate over the privatization of Medicare has been ongoing for years. While some believe this could lead to lower costs and better coverage, others believe this may end up costing Medicare beneficiaries more and limiting their access to certain healthcare.
What does the privatization of Medicare mean?
Medicare is currently a federally funded program. If you choose to use Original Medicare (parts A and B), you receive comprehensive coverage for hospitalization, outpatient services, preventive services, and more. You can also choose to purchase prescription drug coverage (Part D) through a private insurance company.
You also have the option of choosing a Medicare Advantage plan. These plans are offered by Medicare-approved private insurance companies. They offer the same coverage as Original Medicare and often include prescription drug coverage and added benefits not offered by Original Medicare. Additional benefits may include vision, dental, and hearing.
The nonprofit organization KFF notes that 32.8 million people enrolled in Medicare Advantage plans in 2024. This accounted for around 54% of the eligible Medicare population.
These statistics show a trend toward privatized Medicare. Privatization of Medicare means the only option for Medicare beneficiaries would be coverage through private health insurance companies, and it would potentially take away federal funding for Medicare.
According to David A. Lipschutz with the Center for Medicare Advocacy, this trend has been happening since at least 2018. Other Medicare experts believe the trend toward privatization has occurred over the course of the past 20 years.
»Learn more: Origincal Medicare vs. Medicare Advantage
Pros of Medicare privatization
Privatizing Medicare has various potential pros.
Cost
With Original Medicare, you are generally responsible for paying 20% of your treatments and services. You also have to pay deductibles for Part B and Part D, plus meet the Part A deductible each time you are hospitalized.
In 2025, Medicare deductibles are as follows:
- Part A: $1,676 for each hospital stay
- Part B: $257
- Part D: varies by plan but cannot exceed $590
On top of these deductibles, you can also choose to purchase a supplement insurance (Medigap) plan to help cover some of the costs of Original Medicare. The Medigap plan monthly premium can typically cost you an added $200 to $350 per month. This is in addition to the Part B premium of $185 and any premium a Part D plan may include.
Medicare Advantage plans may have lower or no deductibles. They may also include prescription drug coverage. These plans may also have lower out-of-pocket costs overall.
Medicare Advantage plans have an annual limit to out-of-pocket costs. In 2025, the maximum out-of-pocket amount is $9,350. Once you reach this limit, you pay nothing out of pocket for the rest of the year. Some plans may have lower limits.
»Learn more: Medicare costs
Coverage
Medicare Advantage plans offer the same overall coverage as Original Medicare. However, these plans also typically offer additional benefits that Original Medicare does not cover.
The additional benefits can include:
- fitness programs, such as gym memberships or discounts
- vision
- hearing
- dental
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Medicare Costs Defined
Cons of Medicare privatization
There are also different potential disadvantages of Medicare privatization.
Access
With Original Medicare, you can go to any healthcare professional or hospital that accepts Medicare. However, many Medicare Advantage plans have networks of healthcare professionals you must use to avoid paying extra for services and treatments.
Individuals enrolled in Medicare Advantage plans are often required to get a referral to see a specialist. These doctors may also need to be in-network providers. Sometimes individuals may also need to get prior authorization from their insurance provider before receiving coverage for certain medications or services.
Coverage
The Lipschutz commentary notes that research into the quality of care “high cost and high need individuals” with Medicare Advantage receive has flagged concerns.
Research shows that there have been high rates of disenrollment from Medicare Advantage to Original Medicare enrollment, especially among those who use three of the most high cost services:
- long-term nursing home care
- short-term nursing home care
- home healthcare
Lipschutz also notes that the Center for Medicare Advocacy most often receives calls from people who have difficulty receiving medically necessary coverage through their Medicare Advantage plan that would normally be covered by Original Medicare. These difficulties include outright denial of coverage or premature termination for nursing facility care and home healthcare.
Summary
Privatizing Medicare means that Medicare coverage would only be offered through private insurance companies, like Medicare Advantage plans currently are.
There are both pros and cons to the idea of privatization. The pros include potentially lower costs and additional coverage. The cons include less access to doctors and other healthcare professionals due to the use of networks provided by insurance companies. Another con may be difficulty receiving coverage for care for certain high cost services.
Compare 2025 UnitedHealthcare® Medicare Advantage Plans
- See a list of Medicare Advantage plans in your area that may be suited to your unique needs with HelloMedicare™.
- Speak to a Licensed Insurance Agent
- Get a Medicare Advantage Plan Recommendation
Compare 2025 Aetna® Medicare Advantage Plans
- See a list of Medicare Advantage plans in your area that may be suited to your unique needs with HelloMedicare™.
- Speak to a Licensed Insurance Agent
- Get a Medicare Advantage Plan Recommendation
Compare 2025 Anthem® Medicare Advantage Plans
- See a list of Medicare Advantage plans in your area that may be suited to your unique needs with HelloMedicare™.
- Speak to a Licensed Insurance Agent
- Get a Medicare Advantage Plan Recommendation
Compare Medicare Advantage Plans
- See a list of Medicare Advantage plans in your area that may be suited to your unique needs with HelloMedicare™.
- Speak to a Licensed Insurance Agent
- Get a Medicare Advantage Plan Recommendation
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Last medically reviewed on March 26, 2025
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Current Version
Mar 26, 2025
Written By
Mandy French
Edited By
Mandy French
Medically Reviewed By
Philip Ngo, PharmD
Copy Edited By
Delores Smith-Johnson
Reference:
Medically reviewed by Philip Ngo, PharmD — Written by Mandy French on March 26, 2025
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