According to studies published on Monday, private health insurance plans, which server roughly a quarter of Medicare beneficiaries have increased the cost and complexity of the program, without any actual improvement in care.

The studies question the value of some of the Medicare beneficiary private plans, and were done just as President-elect Barack Obama and Democrat congressmen consider cutting the payments these plans receive.

The number of people enrolled in private Medicare plans has almost doubled in five years, to 10.1 million.

In one of the studies, Marsha Gold, senior fellow at Mathematica Policy Research says that Medicare Advantage plans “are now widely available nationwide,” even in rural areas, according to the intentions of Congress in the 2003 revamp.

However according to the study, published in the journal Health Affairs, 48% of the additional subscribers adhere to a plan that adds little to traditional Medicare and does little to coordinate care. The enrollment for the “private fee-for-service plans” bumped to 2.3 million from 26,000 in December 2003.

In a different article, Carlos Zarabozo and Scott Harrison from the Medicare Payment Advisory Commission say that growth in private plans drove up costs due to the government paying them an average of 13% more than if the same beneficiaries used traditional Medicare.

The independent commission which advises Congress has noted this discrepancy for years. “The higher payment rates have financed what is essentially a Medicare benefit expansion for Medicare Advantage enrollees, without producing any overall savings for the Medicare program, and with increased costs borne by all beneficiaries and taxpayers,” wrote Mr. Zarabozo and Mr. Harrison.

As established in the 1980s, Medicare paid private plans 95% of the projected costs for each traditional Medicare beneficiary, because in theory the private plans would save money by coordinating care and thus being more efficient.

The plans have become popular due to the frequently offered additional perks like vision and dental care. Congress has increased payments to private plans over the years in order to spur it to enter new markets.

Beneficiaries have an average of 35 choices of Medicare Advantage plans in each county, says the commission report. However it notes that “Payment increases have been so large that plans no longer need to be efficient to offer extra benefits.”

Health maintenance organization payments are usually 12% higher than what government spends on traditional Medicare beneficiaries. Moreover private fee-for-service plans are 17% higher.

As a response insurance company executives and Bush administration officials defend the private plans:

“Medicare Advantage plans are offering an average of over $1,100 in additional annual value to enrollees in terms of cost savings and added benefits,” said Kerry N. Weems, the acting administrator of the Centers for Medicare and Medicaid Services.

The Obama administration however is looking to lean down the health system. “We need to eliminate the excessive subsidies to Medicare Advantage plans and pay them the same amount it would cost to treat the same patients under regular Medicare,” Mr. Obama declared in an October 15 debate. He went on to describe subsidies as “just a giveaway” to private insurers.