Skip to main page content
Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2016 May 1;35(5):864-72.
doi: 10.1377/hlthaff.2015.1195.

Traditional Medicare Versus Private Insurance: How Spending, Volume, And Price Change At Age Sixty-Five

Affiliations
Free PMC article

Traditional Medicare Versus Private Insurance: How Spending, Volume, And Price Change At Age Sixty-Five

Jacob Wallace et al. Health Aff (Millwood). .
Free PMC article

Abstract

To slow the growth of Medicare spending, some policy makers have advocated raising the Medicare eligibility age from the current sixty-five years to sixty-seven years. For the majority of affected adults, this would delay entry into Medicare and increase the time they are covered by private insurance. Despite its policy importance, little is known about how such a change would affect national health care spending, which is the sum of health care spending for all consumers and payers-including governments. We examined how spending differed between Medicare and private insurance using longitudinal data on imaging and procedures for a national cohort of individuals who switched from private insurance to Medicare at age sixty-five. Using a regression discontinuity design, we found that spending fell by $38.56 per beneficiary per quarter-or 32.4 percent-upon entry into Medicare at age sixty-five. In contrast, we found no changes in the volume of services at age sixty-five. For the previously insured, entry into Medicare led to a large drop in spending driven by lower provider prices, which may reflect Medicare's purchasing power as a large insurer. These findings imply that increasing the Medicare eligibility age may raise national health care spending by replacing Medicare coverage with private insurance, which pays higher provider prices than Medicare does.

Keywords: Cost of Health Care; Medicare.

Figures

Exhibit 1
Exhibit 1
Unadjusted Spending Before and After Entry into Medicare*
Exhibit 3
Exhibit 3
Unadjusted Volume Before and After Entry into Medicare*
Exhibit 4
Exhibit 4
Unadjusted Price Before and After Entry into Medicare*

Similar articles

See all similar articles

Cited by 2 articles

Publication types

Feedback