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Covering seniors now would save money later

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Researchers at Harvard Medical School have uncovered evidence that expanding Medicare may not be as costly as some policymakers contend. That’s because there is evidence that individuals who went without coverage ended up costing Medicare more than those who were continuously insured.

Harvard researchers, in a study financed by the independent Commonwealth Fund, looked at individuals who were intermittently insured between the ages of 51 and 64 and found that they cost the program $1,000 more per year than those who were continuously insured. “Providing health insurance coverage to older uninsured adults may not cost as much as previously thought,” reported study author J. Michael McWilliams, M.D.

McWilliams and his colleagues examined data from two sources, the Health and Retirement Study, a national survey of a large sample of adults, and Medicare claims data. The Health and Retirement Study tracked each survey respondent’s transition into Medicare, beginning at age 51. They divided the sample group into those who were continuously insured before becoming eligible for Medicare at age 65 and those who were not.

Researchers then examined Medicare claims data for these same individuals from ages 65 to 74, employing rigorous statistical methods to account for any variations in demographic and health characteristics before age 65. They discovered that the intermittently insured group cost an average of $5,796 versus $4,773 for the continuously insured, with two-thirds of the difference due to hospitalizations and procedures that could have been prevented or mitigated had the patients received care earlier.

“The bulk of the higher spending was explained by chronic conditions we know how to treat, which makes perfect clinical sense,” says McWilliams. “When uninsured adults do not receive adequate care for hypertension, heart disease and diabetes before age 65, they develop complications that require costlier care after age 65.” The evidence suggests that the intermittently insured individuals had been delaying treatment, which could have relieved their pain and enhanced their quality of life, until they were eligible for Medicare.

“The debate over health reform has focused on its costs rather than its benefits. This important study shows that closing the gaps in health insurance coverage for older adults can have important benefits in controlling chronic conditions early on–contributing to better health and lower cost once they reach age 65 and qualify for Medicare,” said Karen Davis, president of the Commonwealth Fund. “These findings point to the urgent need to act on comprehensive health reform to ensure secure and stable coverage for all Americans, and slow the rise in healthcare costs for employers, families and government.”

The study authors estimated that covering individuals between the ages of 51 to 64 would cost $197 billion, but noted that covering this group would reduce subsequent Medicare costs by $98 billion, with a net cost of $99 billion, significantly less that the amount being cited in the health care debate.

“This study suggests that not only are there substantial health benefits to expanding coverage but that the economic cost may not be as steep as previously thought. These potential economic benefits to the Medicare program are important to consider when evaluating proposals to expand coverage before age 65,” explained senior study author John Ayanian.