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  • Data Points #12: Health care use in the first six months of Medicare eligibility for elders: Impact of State support

Data Points Publication Series



Research Report - Final – Jun. 15, 2012

Data Points #12: Health care use in the first six months of Medicare eligibility for elders: Impact of State support

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Overview

Approximately 10 percent of newly age-eligible Medicare enrollees receive assistance from States either as full Medicaid benefits or as assistance with Medicare premiums or copayments.

The majority of those over age 69 who are fully Medicare and Medicaid eligible at Medicare enrollment have their Medicare Part A premiums paid by the State. This suggests that these individuals have not fully qualified for Medicare benefits based on their own or their spouse's work history.

Newly age-eligible Medicare enrollees who receive any form of State support are more likely to have comorbidities, use health care services, and have higher Medicare payments associated with the services they use.

Since its enactment in 1965, the Medicare program has provided health insurance for older adults who qualify for retirement benefits through Social Security or the Railroad Retirement Board. For these individuals, Medicare hospital services coverage is an entitlement; those who want Medicare coverage for outpatient and physician services must pay annual premiums. All beneficiaries must pay an annual deductible (currently $162) for physician/outpatient services plus a 20 percent copayment after deductible. Care in hospitals and nursing homes also requires annual deductibles, and longer stays require copayments. Thus, Medicare beneficiaries may face significant costs for their health care. Some older adults face additional economic hardship from high costs for services not covered by Medicare, such as extended stays in a nursing home. Long-term care costs are the primary reason older adults "spend down" their assets and become Medicaid and Medicare eligible. In 1988 and again in 1993, assistance for poor older adults expanded from full Medicaid coverage only to a broader array of options. These options include help with premiums, copayments, and deductibles.

The term commonly applied to individuals who receive full Medicaid and Medicare benefits is "duals." People who receive assistance with Medicare premiums and copayments, but not full Medicaid benefits, are inconsistently included in this classification as well. Older adults can achieve dual status in several ways. Some become medically poor by spending large sums on medical care, usually as a result of chronic illnesses. Others may already have been on Medicaid by virtue of disability and/or poverty, and then qualify for Medicare on the basis of age. The number of older adults on Medicare who are either dual-eligible or receive some form of assistance has remained relatively stable for the last 10 years. As of 2009, 12.5 percent of older Medicare beneficiaries received some assistance, ranging from premiums to full Medicaid benefits.

Many studies have compared health care usage between dual-eligible and non-dual-eligible beneficiaries. Few, however, have attempted to distinguish between those new to the Medicare program and those who have received Medicare benefits for an extended period of time. Studies of older adults consistently show dual-eligible beneficiaries to be disproportionately high users of Medicare services. For example, a recent Kaiser Commission report noted that the combined Medicare and Medicaid spending for 7.1 million duals exceeded the Medicare spending for the remaining 30.2 million nonduals ($147.9 billion in 2003 vs. $137.7 billion).

Typically, attempts to identify factors driving health care usage by dual-eligibles have focused on residents of long-term care facilities who have been forced by the costs of such care to "spend down" their assets. However, community-dwelling dual-eligibles also use disproportionately more health care and may receive long-term care at home. Limited research is available evaluating whether any modifiable factors are associated with increased health care use by dual-eligible older adults.

This report examines the health care use and expenditures for the first six months of eligibility for individuals aging into Medicare. We include patient demographic characteristics and prevalence of select comorbidities. We also include information about Medicare enrollees who are also Medicaid eligible, beneficiaries who receive State assistance with their Medicare expenses, and those who receive no State assistance. A previous report, Newly Medicare-Eligible Disabled, examined new beneficiaries who qualify for Medicare benefits due to disability. This report examines new beneficiaries who qualify for Medicare benefits due to their age.

Conclusion

Only about 10 percent of adults age 65 and older receive any form of State assistance during their first six months of Medicare, and these beneficiaries differ in ways that have important implications for the program. First, consistent with patterns of poverty and employment among older adults, racial and ethnic minorities are more likely than Whites to receive any State support. Second, they are more likely to be older than age 69 when they enter Medicare. On its face, this pattern is counter-intuitive. One expects that those late to join Medicare are still working and therefore have higher incomes. Yet, the increased State support for these groups suggests that, in reality, their delayed enrollment may be because they are still working to amass the required 40 quarters of salaried work, or because they must buy in to Part A. Indeed, almost all of the full duals at entry have a beneficiary identification code indicating that their benefits are justified through a buy-in program. While seldom explicitly discussed, at least two States concluded that the cost of the Part A premiums are more than offset by decreased Medicaid expenditures. The Part A buy-in program requires that enrollees have established Part B coverage first. This would explain the observed pattern of unequal Part A and Part B months.

Among new enrollees with observable claims histories, we found a consistently higher percentage of full and partial duals having comorbidities compared with incomplete and nonduals. More than half of full duals have at least one of our target conditions of cancer, Alzheimer's, COPD, depression, diabetes, and ischemic heart disease.

With the exception of cancer, at least twice as many full duals as nonduals had the selected comorbidities. Persons aging into the Medicare program who receive any form of State support are more likely to have multiple comorbidities than those who receive no support. It was beyond our scope to investigate underlying causes of this pattern. While the presence of the comorbidities could explain the Medicaid enrollment, the same pattern of increased prevalence of comorbidities is observed for those who receive some assistance but are not fully dual-eligible. Regardless of whether the comorbidity leads to increased poverty or the poverty contributes to the development of comorbidities, the correlation cannot be ignored.

States varied considerably with regard to both the percentage of older adults new to Medicare who are fully Medicare and Medicaid eligible or who receive State support that is less than six months of full Medicare and Medicaid benefits. Factors related to poverty, disability, and immigration may account for some variation, but State policy cannot be ignored as a driver of these differences. Some of the partial support may reflect attempts to use State policy to control Medicaid growth. For example, States may provide lesser forms of assistance in hopes of maintaining the health of their poorer elders and, ultimately, controlling the size of their Medicaid population.

Programs aiming to control utilization for new Medicare enrollees will need to consider strategies for preventing the onset of comorbidities for those who are apparently free of comorbidity. Likewise, such efforts will require strategic management of comorbid complications for enrollees who have established comorbidity at enrollment. These programs are likely to differently affect full, partial, incomplete, and nonduals.