By Michelle Andrews May
6, 2016
Healthcare spending for some services
dropped by nearly a third when people turned 65 and switched from private
insurance to Medicare, according to a recent study. The decline was driven by lower prices paid by the
Medicare program to doctors and other providers rather than a drop-off in the
volume of services seniors receive.
The study offers a preview of the potential
impact of raising the Medicare eligibility age to 67 from the current 65, said
Jacob Wallace, a doctoral candidate in health policy at Harvard University who
coauthored the study, which was published in the May issue of Health Affairs.
“What this study shows, pretty clearly, is
that while the government may save money by increasing Medicare eligibility to
67, overall national health care spending will go up,” Wallace said.
Using the claims data of 200,870 retired
people who transitioned to traditional Medicare from private insurance at age
65, researchers tracked healthcare spending on a per member, per quarter basis
for two types of services, outpatient imaging and procedures. The study looked
at claims paid for people between the ages of 62 and 68.
When people turned 65 and enrolled in
Medicare, the amount that insurers and beneficiaries spent on those services
dropped 32.4 percent on average, or $38.56.
The spending decline wasn’t tied to a
reduction in beneficiaries’ use of health care services, the study found.
Rather, once seniors enrolled in Medicare, doctors continued to see these
patients, but at reduced rates.
“It crystallized for me that Medicare, due
to its large market share, is able to extract larger discounts from providers
than other payers,” Wallace said. “Medicare is able to pay physicians 30
percent less than other payers, without leading to a reduction in access.”
The impact on individual patients is less
clear, since the change in their spending upon enrolling in Medicare would
depend on the generosity of the private coverage they had before. But since
Medicare generally pays less for services than private insurance, it’s fair to
say that seniors might expect to pay less as well for services when they’re
responsible for paying a percentage of the cost in the form of coinsurance,
Wallace said.
As for raising the Medicare eligibility age
to 67, the study’s findings are consistent with a 2011 analysis by the Kaiser
Family Foundation, the study said. (KHN is an editorially independent program of the
foundation.) That study estimated that raising the Medicare eligibility age
would have saved the federal government $5.7 billion in 2014 but would also
have increased the out-of-pocket costs of 65- and 66-year-olds by $3.7 billion
and employer retiree health care costs by $4.5 billion.
“These findings, like ours, may seem
counterintuitive but show the importance of looking at the total picture when
trying to understand the effects of a seemingly straightforward proposal,” said
Tricia Neuman, director of the program on Medicare Policy at the Kaiser Family
Foundation who coauthored the analysis.
http://khn.org/news/raising-medicares-eligibility-age-could-trigger-govt-savings-but-tally-higher-total-health-spending/?utm_campaign=KHN%3A+First+Edition&utm_source=hs_email&utm_medium=email&utm_content=29325120&_hsenc=p2ANqtz-8MEs_gnc59ZAXpzjUCaoOSurOyD8TMbGhrtZVc8AmIflesVqVVERY1frDioQZopPulcWRH8fQ16xJvTC-0lHgqVQtaPg&_hsmi=29325120
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