Medicare spending for previously uninsured adults

Abstract

Background: 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.

Objective: To compare Medicare spending for previously uninsured and insured adults by using Medicare claims data.

Design: 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.

Setting: Nationally representative Health and Retirement Study, 1992 to 2006.

Participants: 2951 continuously insured adults and 1616 adults who were continuously or intermittently uninsured before age 65 years.

Measurements: Mean adjusted annual Medicare spending (total and by type of service) and annual rates of condition-specific hospitalizations.

Results: 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]; P = 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%; P = 0.002) and for joint replacements (2.5% vs. 1.3%; P = 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.

Limitation: Unobserved confounders could have explained spending differences.

Conclusion: 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.

Primary funding source: The Commonwealth Fund.