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Lower Medicare Costs Linked to Continuous Coverage

Margaret Dick Tocknell, for HealthLeaders Media, January 22, 2014

A GAO report examining the health status, program spending, and use of services by Medicare beneficiaries who were commercially insured for at least six years before joining Medicare suggests that healthcare reform will reduce healthcare spending.

A report from the Government Accountability Office finds that Medicare beneficiaries who were insured for at least six years before joining Medicare are healthier and cost the program less than beneficiaries who are new to healthcare insurance.

This is good news.

Of course, this probably comes as no surprise to commercial insurers who have for years pursued a marketing strategy of trying to lock in members throughout life transitions from individual coverage, to family plans, and then onto Medicare Advantage products. The strategic thinking is simple: people who are accustomed to having health insurance will probably be in better health than those who have had gaps in coverage.

The study was performed at the request of two Senate committees, the Committee on Finance and the Committee on Health, Education, Labor, and Pensions. These bodies are charged with assessing the Medicare program, identifying its challenges, and making recommendations to help maintain the financial sustainability of Medicare.

The GAO report examines the health status, program spending, and use of services of by Medicare beneficiaries between 2001 and 2010. It compares beneficiaries with prior continuous coverage to beneficiaries who enter the Medicare system after several years without health insurance.

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