New GAO Report: Extra subsidy makes private Medicare Advantage more expensive than traditional Medicare

The GAO reports that Medicare spends more per beneficiary in private Medicare Advantage plans than it does for beneficiaries in the original Medicare program - a projected $54 billion more from 2009 to 2012.

Under Medicare Advantage, the government first reimburses insurance companies for medical expenditures. Then it provides an additional payment for nonmedical expenses such as marketing, sales and profits.