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