HEALTH POLICY

Cost of Expanding Medicare to Near-elderly Uninsured Could Be Offset by Care Savings

Savings After Age 65 Might Be Pronounced for People with Chronic Disease

While the overall cost-effectiveness of Medicare benefits has been much debated, new data now show that people who were uninsured before receiving benefits at age 65 required more intensive and costlier care than those who had been privately insured prior to receiving Medicare. The findings, from HMS researchers, appear in the July 12 New England Journal of Medicine.

Graham Ramsay	Graham Ramsay
John Ayanian (left), J. Michael McWilliams, and colleagues have shown that uninsured near-elderly patients with diabetes or cardiovascular disease likely would require fewer medical resources after entering the Medicare program if they had been insured prior to age 65.

“The implication is that expanding coverage to uninsured near-elderly adults may not cost as much as previously thought,” said J. Michael McWilliams, research fellow at HMS and Brigham and Women’s Hospital. “Particularly for those with heart disease, hypertension, or diabetes, earlier access to effective treatments can prevent costly complications and reduce health care needs after age 65.”

Created in 1965, Medicare now covers nearly 43 million elderly and disabled Americans. In 2006, the program’s cost of $374 billion accounted for 14 percent of the federal budget, and federal spending on Medicare is expected to grow to $524 billion by 2011. According to the Kaiser Family Foundation, Medicare spending as a share of GDP is estimated to increase from 2.7 to 4.7 percent by 2020 as a larger proportion of the population survives well beyond age 65.

Despite the size of the program, Medicare may still not be helping enough people. “The expansion of Medicare coverage to uninsured adults before the age of 65 has been proposed in Congress over the past several years, in part because if adults have chronic conditions in their late 50s and early 60s, it’s very difficult for them to obtain private insurance on their own. Even if they’re eligible for it, it can be prohibitively expensive,” said John Ayanian, associate professor of medicine and of health care policy at Brigham and Women’s Hospital and HMS.

Weights and Measures
McWilliams and Ayanian, along with colleagues in the HMS Department of Health Care Policy, conducted a study comparing previously uninsured with insured adults to see how each group used health services before and after entering Medicare. Using data from a national survey, the Health and Retirement Study, the researchers followed 5,158 adults for 12 years, from 1992 through 2004, who were age 53 to 61 at the start of this period.

The researchers compared health care use and expenses for 3,773 subjects who were insured and 1,385 who were uninsured before 65. In addition to the data on health care use, the survey captured information on dozens of different characteristics, from subjects’ exercise habits to depression symptoms.

To account for the large differences between insured and uninsured adults in areas such as education and income levels, the researchers weighted the insured group when comparing them with the uninsured group: insured subjects who closely resembled the uninsured group in education, income, and other characteristics were given much more statistical weight than the insured subjects who were very different.

Seesawing Costs
When the researchers compared these statistically similar groups, the differences due to insurance were clear. “After previously uninsured adults gained Medicare coverage at age 65, their health care use not only rose to the level of previously insured adults but exceeded it substantially. These greater health care needs persisted at least through age 72,” said McWilliams.

These findings were especially noticeable in adults with cardiovascular disease or diabetes, illnesses that can be life-threatening when left untreated, but manageable if caught early. “This is a group for whom medical advances in recent decades have had an impressive impact on health. If people with diabetes, hypertension, or heart disease are uninsured, they often have to forego very cost-effective therapies,” said McWilliams.

Care comparisons. In a study of Medicare usage, obtaining coverage at age 65 was associated with significantly greater increases in doctor visits (left graph) for previously uninsured adults compared to previously insured adults with cardiovascular disease or diabetes (red), but not for adults without these conditions (black). Medicare coverage at age 65 was also associated with significantly greater increases in hospitalizations (right graph) for previously uninsured adults compared to previously insured adults with cardiovascular disease or diabetes (red), but not for adults without these conditions (black).

“Providing health insurance coverage for uninsured near-elderly adults may not only improve their health, but also reduce their annual health care use after age 65,” he said. “Particularly for those with cardiovascular disease or diabetes, these benefits are likely to be substantial and may partially offset the costs of expanding coverage.”

—Lauren Cahoon

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