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.
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.
Fewer Physician Office Visits
Beneficiaries with prior insurance coverage made 23% to 50% more physician office visits during their first 5 years in Medicare than those without prior coverage. According to the report, this utilization pattern may indicate that beneficiaries with prior continuous insurance continued to access medical services differently because they were more accustomed to having benefits that physician office visits.
During the first year, beneficiaries without prior insurance spent more on physicians and other non-institutional spending—$381 or 17% more. But after the first year, the beneficiaries with prior coverage spent $589 or 30% more in year four and $511 or 28% more in year five. We know that they visited physicians more often, so this higher expenditure makes sense.
The GAO report seems to confirm that having healthcare insurance as required by the Patient Protection and Affordable Care Act helps lower beneficiary Medicare costs not sometime in the undefined future, but within the first years of enrollment.
Could the much-maligned PPACA and its equally maligned individual mandate could help save Medicare? Stay tuned.
Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
