Medical costs were lower than carriers expected and administrative costs higher during the first year of Medicare Advantage plan operations.
James Cosgrove, a director at the U.S. Government Accountability Office, comes to that conclusion in a letter written to Rep. Pete Stark, chairman of the House Ways and Means Committee health subcommittee.
To generate the report to Stark, GAO researchers looked at 2005 data that holders of 120 large Medicare contracts submitted to the federal government.
Cosgrove notes that the researchers still are analyzing 2006 Medicare Advantage plan data.
The analysis of the 2005 data, which covers plans with at least 2,000 beneficiaries that were open to the public, shows that the plans expected to generate about $33.7 billion in revenue.