J. Michael McWilliams, MD, PhD; Ellen Meara, PhD; Alan M. Zaslavsky, PhD; John Z. Ayanian, MD, MPP
Medicare spending after age 65 years may be higher for previously uninsured adults if suboptimal care before this age leads to irreversible complications, persistently elevated clinical risks, or delay of costly elective procedures.
To compare Medicare spending for previously uninsured and insured adults by using Medicare claims data.
Longitudinal survey data and linked Medicare claims data were used to compare Medicare spending for beneficiaries age 65 to 74 years who were previously insured or previously uninsured before age 65 years. An inverse-probability-of-treatment weighting technique was used to adjust for fixed and time-varying sociodemographic and health characteristics before age 65 years. Condition-specific hospitalizations were compared, and their contribution to differences in Medicare spending was estimated.
Nationally representative Health and Retirement Study, 1992 to 2006.
2951 continuously insured adults and 1616 adults who were continuously or intermittently uninsured before age 65 years.
Mean adjusted annual Medicare spending (total and by type of service) and annual rates of condition-specific hospitalizations.
Adjusted annual total Medicare spending was significantly higher for previously uninsured than previously insured adults ($5796 vs. $4773; difference, $1023 [95% CI, $29 to $2016]; PÂ = 0.044). Among relevant clinical subgroups, previously uninsured adults had higher adjusted annual hospitalization rates than previously insured adults for complications related to cardiovascular disease or diabetes (9.1% vs. 6.4%; PÂ = 0.002) and for joint replacements (2.5% vs. 1.3%; PÂ = 0.006). Differences in these hospitalizations accounted for 65.7% of the $644 difference in annual Medicare inpatient spending between all previously uninsured and insured adults.
Unobserved confounders could have explained spending differences.
Costs of expanded coverage before age 65 years may be partially offset by subsequent reductions in Medicare spending after age 65 years, particularly for uninsured adults with cardiovascular disease, diabetes, or severe arthritis.
The Commonwealth Fund.
Most proposals for health care reform in the United States provide insurance coverage for uninsured people.
Medicare spends more for people who were uninsured before they become eligible for Medicare than for people who were insured before they become eligible for Medicare ($5796 vs. $4773 per year during the 10 years after joining Medicare).
Unobserved confounders might explain the difference.
Insurance coverage for uninsured adults might be a more valuable investment for the United States than previously thought.
Mean adjusted total Medicare spending is plotted by age and insurance coverage before age 65 for adults with (top) and adults without (bottom) a reported diagnosis of hypertension, heart disease, stroke, or diabetes by age 67. Annual Medicare spending after age 65 was significantly higher for previously uninsured adults than previously insured adults with CVD or diabetes, and this difference was particularly large for those age 65 to 71 (adjusted difference, $1400; P = 0.027) (top). Annual Medicare spending after age 65 did not differ for previously uninsured and insured adults without CVD or diabetes (bottom). Plots were truncated from age 74 to age 72 because of smaller sample sizes for estimates after age 72. Error bars are SEs. CVD = cardiovascular disease.
Among adults with cardiovascular disease or diabetes, annual rates of hospitalization after age 65 for complications related to these conditions were significantly higher for previously uninsured adults than previously insured adults. This increased risk in previously uninsured adults diminished with increasing age, but not significantly (P = 0.38 for interaction between previous insurance coverage and age). Error bars are SEs.
University of Pennsylvania and National Center for Health Statistics
December 8, 2009
Would Insuring the Near-Elderly Reduce Medicare Spending Beginning at Age 65?
McWilliams and colleagues (1) find that Medicare spending is higher for the previously uninsured and use this finding to suggest that nearly half of the cost of expanding health insurance coverage to uninsured near- elderly adults might be offset by reduced spending once the age of 65 has been reached. We do not believe this research supports the notion of cost savings from insuring the uninsured, because a large fraction of higher Medicare expenditures observed for the previously uninsured cannot be avoided by insuring people earlier. As pointed out by Bhattacharya (2), this may be particularly true if poor health caused them to be uninsured rather than poor health resulting from lack of insurance.
McWilliams and colleagues are unable to adequately control for this reverse causation. This problem is exacerbated by including in their sample individuals from the Health and Retirement Study who acquired public insurance after 1992 but before turning age 65. (Of these, individuals who are ever uninsured before turning 65 are included in the "uninsured" sample.) Adults who transition to public insurance before age 65 are likely to have had a health event that led them to become eligible for public insurance. This health event may have also caused them to be uninsured prior to obtaining public coverage. For example, individuals who quality for Medicare prior to age 65 due to participation in Social Security Disability Insurance (SSDI) qualify only after a 24-month waiting period following SSDI entitlement. Since they must be too disabled to work in order to qualify for SSDI, a substantial fraction are uninsured during the waiting period. (3) According to our estimates using McWilliams' sample definitions, 25% of the "uninsured" but only 11% of the "insured" transitioned to public insurance before turning 65. Because the disabled are more likely to use health care services and because their health characteristics are not adequately captured in the control variables, the McWilliams estimate includes spending that could not be avoided by insuring the uninsured. Our calculations suggest that the McWilliams estimate of the difference in Medicare spending between the uninsured and insured would drop by 50% if those ever public insured before age 65 are dropped from the sample.
Unrealistic expectations about the cost of health reform could lead to early dissatisfaction with reform efforts and result in their curtailment. The costs of insuring the near-elderly uninsured are unlikely to be offset by significant reductions in Medicare spending after age 65.
1. McWilliams JM, Meara E, Zaslavsky AM, Ayanian JZ. Medicare spending for previously uninsured adults. Ann Intern Med. 2009;151.
2. Bhattacharya J. Insuring the Near-Elderly: How Much Would Medicare Save? Ann Intern Med. 2009;151.
3. Riley GF. Health Insurance and Access to Care among Social Security Disability Insurance Beneficiaries during the Medicare Waiting Period. Inquiry. 2006. 43; 222-230.
Note: The views expressed in this letter reflect those of the authors and do not necessarily represent the views of the Centers for Disease Control and Prevention.
McWilliams JM, Meara E, Zaslavsky AM, et al. Medicare Spending for Previously Uninsured Adults. Ann Intern Med. 2009;151:757–766. doi: https://doi.org/10.7326/0000605-200912010-00149
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Published: Ann Intern Med. 2009;151(11):757-766.
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