Medicare Growth, Technological Advances, and
the Distribution of Health Care Benefits
Jonathan Skinner
Weiping Zhou
A Simple Question
Have the billions of health care dollars
spent during the 1990s improved or
worsened inequality in health and wellbeing in the elderly population?
A Not So Simple Answer
Expenditures/utilization for health care: High income
people get:
• Less (Battachyaria and Lakdawalla, 2003))
• More (Le Grand, 1982; McClellan and Skinner, 2003,
Sanchez et. al., 1992).
A Not So Simple Answer
Improvements in Outcomes: High education / nonminority people get
•
Less (McDermott, 1978)
• More ( (Glied and Lleras-Muney, 2003; Goldman and
Smith, 2002; Lichtenberg and Lleras-Muney, 2002)
A Not So Simple Answer
Improvements in Outcomes: High education / nonminority people get
•
Less (McDermott, 1978)
• More ( (Glied and Lleras-Muney, 2003; Goldman and
Smith, 2002; Lichtenberg and Lleras-Muney, 2002)
How do you measure inequality in health or in full
income anyway?
Our Strategy
• Expenditures: Fuchs proto-full income measure (Medicare
expenditures plus adjusted CPS income)
– Data sources: Current Medicare History Survey (CMHS), CPS
Our Strategy
• Expenditures: Fuchs proto-full income measure (Medicare
expenditures plus adjusted CPS income)
– Data sources: Current Medicare History Survey (CMHS), CPS
• Outcomes: CMHS
• Utilization: Cooperative Cardiovascular Project (CCP) data
on heart attack patients (1994/95)
Two measures of income: per capita family (CPS) and zip
code (CMHS, CCP)
Percentage Increase in Money Income 1992-2001
30
25
20
Low Income
Middle Income
High Income
Percent 15
10
5
0
Money
Income
Full Income
(1)
Full Income
(2)
Percentage Increase in Full Income (1): Money
Income plus Medicare Expenditures, 1992-2001
30
25
20
Low Income
Middle Income
High Income
Percent 15
10
5
0
Money
Income
Full Income
(1)
Full Income
(2)
Medicare Expenditures (Males Age 80-84) 1987 and
1997, by Income Decile
8000
7500
1997
Medicare Expenditures
7000
6500
6000
5500
5000
1987
4500
4000
3500
3000
1
2
3
4
5
6
7
8
9
10
Income Decile
Source: McClellan and Skinner, 2003
How Big is a Big Twist?
• Decile 10 spending
increase ($3300) less Decile
1 spending increase ($1600)
2000
1800
1600
1400
1200
1000
800
600
400
200
0
Medicare
EITC
How Big is a Big Twist?
• Decile 10 spending
increase ($3300) less Decile
1 spending increase ($1600)
•Average EITC Payments per
family receiving EITC
(1997) Source: Brookings-Urban Website
2000
1800
1600
1400
1200
1000
800
600
400
200
0
Medicare
EITC
Average Home Health Care Spending By Decile
1987-2001: Men Age 80-84 in 1987
2500
2000
1500
1000
500
0
1997$
Lowest Income
Decile
Highest Income
Decile
Home Health Care Expenditures 1996 by Region
Next Measure: Changes over time in Income
Including Lifespan
How Does One Place a Dollar Value on Lifespan
Extension?
Approach number 1: value gains in life-years for low income
households by more (Cost-Benefit Analysis)
Approach number 2: Value gains in life-years for low income
households by less (Becker et. al. “WTP”)
10-Year Survival Rates Rose in Highest Income
Deciles by More than in Lowest Income Deciles
0.82
0.8
1992-2001
10-year Survival Rate
0.78
0.76
0.74
0.72
0.7
1982-91
0.68
0.66
0.64
0.62
1
2
3
4
5
6
Income Decile
7
8
9
10
Percentage Increase in Full Income (2): Money
Income plus Value of Life Extension, 1992-2001
30
25
20
Low Income
Middle Income
High Income
Percent 15
10
5
0
Money
Income
Full Income
(1)
Full Income
(2)
A Third Approach: Focus on Utilization of
“Effective” Technological Innovations
Causes of 90-Day AMI Mortality Decline, 1975-1990
Source: Heidenrich and McClellan, 2001
Aspirin
Beta Blocker
Thrombolytics
ACE Inhibitors
Primary PTCA
No Significant Impact: CABG, calcium antagonists,
PTCA (non-primary), nitrates, anticoagulants, etc.
Effective Care Following AMI: By Zip Code Income
Beta
Blocker
ACE
Inhibitor
Reperfusion
Smoking
Cessation
Advice
Decile 1
40
57
32
33
Decile 10
47
59
37
35
Difference
7
2
5
2
Beta Blocker Use By Region
Source: Dartmouth Atlas
100.0
80.0
60.0
40.0
20.0
0.0
Percent of “Ideal” Patients Receiving Beta Blockers at Discharge
Following AMI (1994-95)
Income per Capita in 2000 and
Average 1-Year AMI Mortality (1989-2000) by State
.02
MS
AR LA
WV
TX
OK
NJ
6.94e-18
KY
ALSC
TN
OH
NCMOGA
IN
FL
OR
KS
AZ
MI
IL
-.02
NY
MD
VA
MA
WA
WI
IA
ME
CA
NV
PA
RI
ID
DE
NE
CT
MN
NH
CO
-.04
NM
ND
WY
VT
MT
UT
-.06
SD
20000
25000
30000
35000
per capita income (nominal), 2000
40000
.02
Putnam’s Social Capital Index and
Average 1-Year Mortality (1989-2000) by State
MS
TX
KY
ALSC TN
NCGA
6.94e-18
OK
AR
LA
NV
WV
NJ
CA
DE
FL MD
KS
VA
-.02
AZ
OH
MO MI
IN
ILNY
PA
NH
OR
RI MA
WA
WI CT IA
ID
MN
NE
ME
CO
-.04
NM
ND
WY
VT
UT
MT
-.06
SD
-1
0
1
Soc Cap Index, Putnam
2
Medicare Expenditures (Age 70-74 M) by Year
(1982-91 or 1992-2001)
$1996 Expenditures
7000
Decile 1 in 1992
6000
Decile 10 in 1992
5000
4000
3000
Decile 1,10 in 1982
2000
1000
0
1
2
3
4
5
6
Year
7
8
9
10