UNINSURED HAVE MORE PHYSICIAN VISITS UPON GAINING MEDICARE COVERAGE

Almost all Americans participate in Medicare coverage once age 65. For some, Medicare means moving from being without health insurance to having health insurance. Li-Wu Chen and colleagues, in a study funded by the Economic Research Initiative on the Uninsured, look at changes in use of physician and hospital services among those who pass the age 65 milestone. They find that previously uninsured Medicare enrollees are more likely to experience an increased number of physician visits but not hospital days.

FINDINGS
Impact on service use and cost.

• Those who were uninsured at age 63 reported 30% more physician visits from ages 65 to 67 than those were who insured at age 63 (t-statistic: 2.13).
• Compared to previously insured Medicare enrollees, previously uninsured enrollees were 1.87 times as likely to have any increase in visits (90% CI: 1.05-3.31) and 5.48 times as likely to experience a 400% or more increase in the number of visits (90% CI: 2.91-10.33) after enrolling in Medicare.
• Among those who spent one or more days in a hospital during the 2-year period prior to Medicare enrollment, the change in hospital days during the 2 years following Medicare enrollment was not statistically significant for either previously insured or previously uninsured enrollees.
• Applying these results to Medicare per capita expenditure data for 1999, the previously uninsured had $580 more Medicare expenditures per year for physician services.

POLICY IMPLICATIONS
Medicare's near-universal coverage of Americans over age 65 turns the private cost of not having health insurance into a public cost.

METHODOLOGY
Series of logit models: any increase in physician or hospital use, 100% or more increase, 200% or more increase, 300% or more increase, and 400% or more increase. Estimate of percentage increase in visits from an OLS model with logged number of physician visits, ages 65-67, as the dependent variable.

CAVEATS
Additional service use by those who move from uninsured to insured through Medicare may be one time ("pent up demand") or ongoing, with the latter due, for example, to undertreated chronic conditions that require ongoing care. The focus on the period just before and just after reaching 65 does not distinguish between these two possibilities.

The HRS surveys respondents every two years; some of those uninsured at age 63 may gain health insurance before reaching age 65. Gaining coverage likely biases coefficients downwards.

There are substantial demographic differences between insured and uninsured 63 year olds. If these differences relate to different trends in use between the two groups, part of the "Medicare effect" will be misattribution of the difference in trend to being an effect of Medicare.

DATA SOURCE
First five waves of the Health and Retirement Study (HRS), 1992 - 2000. From a preliminary sample of 640 people with no missing data on health insurance coverage at age 63 and survey data for the period covering ages 63 to 67, 416 remained in the analysis sample after excluding those who had missing information on key variables.

CITATION
Pent-Up Demand: Health Care Use of the Uninsured Near Elderly
Li-Wu Chen, Wanqing Zhang, Jane Meza, Roslyn Fraser, Keith Mueller, Phani Tej Aidam, Louis Pol, and Dennis Shea.

ERIU Working Paper #26

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