Gaps in Supplemental Health Insurance for Disabled Medicare Beneficiaries

1. Gaps in Supplemental Health Insurance for Disabled Medicare Beneficiaries Jill Klingner MS RN Rural Health Research Center University of Minnesota AcademyHealth State Health Research and Policy Interest Group Meeting June 24, 2006 Seattle Washington

2. Research Questions • For the disabled under-65 Medicare Beneficiaries • Do state Medicaid and Medigap policies affect their enrollment in Medicaid or Medigap? • Does enrollment in supplemental Medicare insurance affect their health status?

3. Medicare Overview • Established in 1965 for the elderly • Expanded in 1972 for the disabled • Medicare out of pocket expenses • Co-pays • Deductibles • Non-Covered items • Supplemental coverage often sought

4. Distribution of Supplemental Policies by Source

5. Disabled Access to Supplemental Policies • State Medicaid policies differ for disabled • Disabled not included in federal Medigap guarantee-offer policy • Medigap guarantee-offer policies for the disabled vary by state

6. Disabled Medicare Beneficiaries • Nearly 7 million people or over 15% of Medicare beneficiaries (2005) • Social Security Disability Insurance (SSDI) Eligibility • Paid FICA taxes for 5 of the previous 10 years • Specialty eligibility rules for some conditions

7. Disabled vs. Aged Beneficiaries • Poorer self-reported health status • More health needs • Higher health costs • Lower incomes • Less able to purchase supplemental policy • Less able to purchase health care

8. Data Sources • Medicare Current Beneficiary Survey (MCBS) 1997-2001 • Longitudinal • Self-report and claims • State Policy : AARP Public Policy Institute Oct 1999 #9915. • Area Resource File (ARF)

9. Sample • Disabled observations from 1997-2001 • 8000+ • Sample for insurance estimation • Unique observations =4254 • Sample for outcomes estimation • Individuals with more than one year =2746

10. Sample Demographics

11. Model for Supplemental Insurance Choice and Outcomes Choice Characteristics Personal Characteristics State Policies Dependent Variable 1=Choice Dependent Variable 2= Health Status Change Available Supplements Market Factors State FE Provider supply

12. State Policies of Interest • Medicaid income limits • Medicaid buy-in option • Medically needy option • Medigap guarantee-offer • # of plans required • # of prescription plans required

13. Supplemental Insurance Estimation Equations • Utility • Multinomial Logit equation Pr(y=1|x)= exp(α+βx) 1+ exp(α+βx) J=1, 2, 3, 4, 5

14. Results: Effect of State Policies on Enrollment in Medicaid or Medigap R2=.2361 (N=3074)

15. Other Significant Variables

16. State Policies that Affect Medicaid Enrollment • Increase Medicaid enrollment • # of Medigap plans required by the state’s guarantee-offer policy • Decrease Medicaid enrollment • Medicaid buy-in • FPL% * income • State prescription drug program for disabled

17. State Policies that Affect Medigap Enrollment • Increase Medigap enrollment • # of Medigap prescription drug plans required by the state’s guarantee-offer policy • Decrease Medigap enrollment • # of Medigap plans required by the state’s guarantee-offer policy • # of Medigap firms

18. Estimates for Rural DisabledR2=.3019 (N=954)

19. Outcome Equation Estimation challenges Insurance variable may be correlated with unobserved variables, selection conserns and error term Does enrollment in supplemental policies affect health status?

20. Solution :Instrumental Variables • Variables that are correlated with the original independent variable but not the errors (Like random assignment) • Instruments used are the predicted probability from the supplemental insurance estimation

21. Outcome Definitions

22. Significant Health Status Effects

23. Significant Control Variables • Health∆ affected by: • Male, Vet elig, Single, PCI, Chronic condition, Some State FE • Func ∆ affected by: • Some State FE • Func ∆ with consumer wts affected by: • Single, White, Metro, Year 2000, Vet elig, Some State FE • Func ∆ with expert wts affected by: • White, Vet elig, Single, Some State FE

24. Rural Health Effects

25. Conclusions • Identified state policies affect Medicaid and Medigap enrollment. • Supplemental coverage affects health outcomes for subgroups of the disabled. • State fixed effects are significant in both the estimation of enrollment and the estimation of health outcomes. This needs additional research.