MEDICARE SPENDING FOR PREVIOUSLY UNINSURED ADULTS J. Michael McWilliams, MD, PhD,

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MEDICARE SPENDING FOR
PREVIOUSLY UNINSURED ADULTS
J. Michael McWilliams, MD, PhD,
Ellen Meara, PhD, Alan M. Zaslavsky, PhD,
John Z. Ayanian, MD, MPP
Division of General Medicine
Brigham and Women’s Hospital
Department of Health Care Policy
Harvard Medical School
AcademyHealth Annual Research Meeting
June 28, 2009
Background
 Near-universal Medicare coverage after 65:
• Increases use of health services
• Improves self-reported health trends
• Reduces disparities in disease control
 Previously uninsured Medicare beneficiaries
may require costlier care than if previously
insured
 Estimates of the costs of expanding coverage do
not consider these potential cost offsets
Study Objectives
1. Compare Medicare spending for previously
uninsured and insured adults using claims data
2. Analyze rates of condition-specific
hospitalizations and determine their
contributions to spending differences
3. Calculate potential reductions in Medicare
spending after 65 if all Americans currently
51-64 were continuously insured until 65
Expected Effects of Uninsurance:
Mechanisms

Irreversible complications before 65, elevated
risks and increased disease burden after 65
•
•

Delay of elective procedures until after 65
•

Cardiovascular disease (HTN, CHD, or CVA)
Diabetes
Joint replacement surgery for osteoarthritis
Disease progression unaltered  no persistent
increase in disease burden after 65
•
COPD
Study Population and Data
 4567 Health & Retirement Study (HRS)
participants with linked Medicare claims
 Annual claims data to assess utilization and
Medicare spending for 1-10 years after 65
 Biennial survey data to assess insurance coverage
and other characteristics over 4-13 years before 65
• Previously Insured: 2951 continuously insured before 65
• Previously Uninsured: 1616 continuously or intermittently
uninsured before 65
Challenge to Study Design
 Problem: time-varying confounders
Uninsurance  Health decline
or
Health decline  Uninsurance
 Solution: Inverse probability weighting technique
• P(uninsuredt) independent of observed characteristicst
Fixed: sex, race, ethnicity, education, veteran status
Time-varying: general health, physical functioning, conditions,
BMI, smoking status, income, employment, marital status
• No bias from observed time-varying confounders
Weighted Comparisons of
Previously Insured and Uninsured
 Compared per-beneficiary annual Medicare
spending after 65, in total and by type of service
 Stratified by presence of CVD or DM
 Adjusted for geography, supplemental coverage,
survey non-response
 Compared condition-specific hospitalizations
based on DRGs among high-risk clinical groups
Adjusted Annual Medicare Spending
by Type of Service
Mean spending ($ / person)
P=0.04
6000
5000
4000
P=0.04
3000
P=0.11
2000
P=0.75
1000
P=0.02
P=0.11
P=0.64
Home
Health
DME
SNF
0
Total
Inpatient Part B
Previously Insured
Outpt
Inst
Previously Uninsured
Adjusted Medicare Spending by Age
10000
8000
$
6000
4000
2000
0
65
66
67
68
Previously Uninsured
69
70
71
72
Previously Insured
Differences in Annual Medicare Spending
Previously Uninsured ─ Previously Insured
1293
1400
P=0.04
1016
1100
Difference
in Mean
Annual
Spending
($ / person)
P=0.04
800
500
865
309
P=0.03
601
P=0.54
P=0.04
200
-100
Entire Cohort
CVD or DM
Inpatient
No CVD or DM
Other
Adjusted Annual Rates of Condition-specific
Hospitalizations Among High-risk Groups
10
OR: 1.46
P=0.002
37% of admissions but explained
67% of difference in inpt spending
8
6
%
OR: 1.45
P=0.03
OR: 1.82
P=0.007
4
OR: 0.52
P=0.05
2
0
Complications
related to
CVD or DM
MI, CHF, or
CVA
Previously Insured
Joint
COPD
Replacement Exacerbation
Previously Uninsured
Annual Hospitalization Rate for
Complications Related to CVD or DM
12
10
8
%
6
4
2
0
65
66
67
68
Previously Uninsured
69
70
71
Previously Insured
72
Net Costs of Continuous Coverage
for Adults 51-64
$197B increase in total spending
before 65
─
$98B decrease in Medicare spending
after 65
=
~50% offset
Sources: Hadley et al., Health Aff 2008; US Census Bureau, 2008
Limitations

Unobserved health-care preferences or
disease severity not caused by uninsurance
•
•
Would expect persistent spending differences
Would expect similar findings for COPD

Potential overadjustment

Assumed no effects of coverage on mortality
•
•
Would increase costs of expanding coverage
Would add valuable years to lives of many
Conclusions & Policy Implications
 Adjusted Medicare spending higher for
previously uninsured than insured adults
• Differences varied in clinically hypothesized manner
• Largely explained by hospitalization for complications
related to CVD or DM and joint replacements
 Insurance coverage for uninsured adults over 50
a valuable investment for the U.S.
• Health gains for many working-age adults
• Subsequent reductions in spending after 65 may
partially offset increased spending before 65
Acknowledgements
Funding Support
The Commonwealth Fund
Thank You
Inverse Probability of Treatment Weighting
 Construction of weights:
• Logistic regression model of insurance status at each
survey < 65 as function of characteristics at that time
and insurance status in preceding survey
• Product of P(Insurancet,i | characteristicst,i) =
P(Cvg patterni | fixed & time-varying characteristicsi)
• Weighti = 1/(cumulative Pi)
• P(Insurancet,i | insurancet-1,i) in numerator to reduce
variance
Challenge to Study Design
 Problem: time-varying confounders
Uninsurance  Health decline
or
Health decline  Uninsurance
 Solution: Inverse probability weighting technique
• P(uninsuredt) independent of observed characteristicst
Fixed: sex, race, ethnicity, education, veteran status
Time-varying: general health, physical functioning, conditions,
BMI, smoking status, income, employment, marital status
• No bias from observed time-varying confounders
50% bad
health
1000 Good
200 U
800 I
25%
bad health
100 Good
25 U
75 I
Weight = π(1/P(A | L))
1/(.2 x .25) = 20
1/(.2 x .75) = 6.667
100 Bad
40 U
60 I
1/(.2 x .4) = 12.5
1/(.2 x .6) = 8.333
600 Good
60 U
540 I
1/(.8 x .1) = 12.5
1/(.8 x .9) = 1.389
200 Bad
40 U
160 I
1/(.8 x .2) = 6.25
1/(.8 x .8) = 1.5625
50% bad
health
4000 Good
2000 U
2000 I
25%
bad health
1000 Good
500 U
500 I
Weight = π(1/P(A | L)
1/(.2 x .25) = 20
1/(.2 x .75) = 6.667
1000 Bad
500 U
500 I
1/(.2 x .4) = 12.5
1/(.2 x .6) = 8.333
1500 Good
750 U
750 I
1/(.8 x .1) = 12.5
1/(.8 x .9) = 1.389
500 Bad
250 U
250 I
1/(.8 x .2) = 6.25
1/(.8 x .8) = 1.5625
U: 1250 Good, 750 Bad
I: 1250 Good, 750 Bad
Net Costs of Continuous Coverage
for Adults 51-64
 $197B increase in total spending before 65
• $1948/person adjusted difference between insured
and uninsured
• 16.3M adults 51-64 who are or will be uninsured
before 65
 $98 B decrease in Medicare spending after 65
• $1016/person adjusted difference ages 65-74
• 15M adults 51-64 who are or will be uninsured before
65 and will survive to 65
• 2.4% annual mortality among previously uninsured
Sources: Hadley et al., Health Aff 2008; US Census Bureau, 2008
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