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Lower Medicare Costs Linked to Continuous Coverage

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

Among the benefits of continuous coverage identified by the GAO:

Better Health
Beneficiaries with continuous insurance were more likely to say they are in better health (84.2% vs. 78.7%). The gap widens rather than narrows after five years of coverage (81% vs. 75.1%). "Being uninsured before Medicare may have effects on beneficiaries' health that remain for some time. For example, if a beneficiary without prior continuous insurance is diagnosed with diabetes and has inadequate access to care before Medicare, the beneficiary may develop complications that increase the risk for adverse health events for years to come, even after the diabetes is controlled," says the report.

Lower First-Year Costs
During their first year in Medicare, the total program spending for beneficiaries without prior continuous insurance is about 35% ($2,300) more than those with who had been covered by commercial plans without interruption. The higher spending may reflect pent-up demand for medical services among those without prior coverage. In this case the spending gap steadily narrows to $562 in the fifth year.

Lower Spending on Outpatient Services
Although the number of institutional outpatient visits was not statistically different, beneficiaries with prior coverage had lower institutional outpatient spending during their first and second years in Medicare—$513 or 32% less and $609 or 33% less.

After year three, however there is no discernible pattern of difference—sometimes the gap narrows and sometimes it widens. Again, pent-up demand comes into play. The results suggest that beneficiaries without continuous prior insurance required more costly outpatient care in those early years.

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