Gaps in Supplemental Health Insurance for Disabled Medicare

BeneficiariesJill Klingner MS RN

Rural Health Research CenterUniversity of Minnesota

AcademyHealthState Health Research and Policy Interest Group Meeting

June 24, 2006Seattle Washington

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?

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

Distribution of Supplemental Policies by Source

Aged

Medigap25%

Medicare HMO16%

Employer sponsor

39%

Medicaid10%

No supplement10%

Disabled Under-65

Medigap5%

No supplement24%

Medicaid39%

Employer sponsor

23%

Medicare HMO9%

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

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

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

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)

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

Sample DemographicsCharacteristic Sample Disabled Aged

Single 68% 59% 44%

White 75% 67% 81%

Male 58% 55% 43%

Rural 30% 26% 23%

Income < $10,000 40% NA 17%

Education Less than HS HS Grad More than HS

38%37%25%

34%31%34%

30%30%40%

Health Status Fair/Poor Good V. good/Excellent

53%29%18%

62%24%13%

22%32%45%

Model for Supplemental Insurance Choice and Outcomes

Personal Characteristics

State Policies

Market Factors

Available Supplements

Dependent Variable 2=

Health StatusChange

Choice Characteristics

DependentVariable 1= Choice

Provider supply

State FE

State Policies of Interest

• Medicaid income limits• Medicaid buy-in option• Medically needy option• Medigap guarantee-offer

– # of plans required– # of prescription plans required

Supplemental Insurance Estimation Equations

• Utility

• Multinomial Logit equationPr(y=1|x)= exp(α+βx)

1+ exp(α+βx)

EffectsStateFixedPolicyJ jijii )1(PrJ=1, 2, 3, 4, 5

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

Policy MedicaidCoef (se) p value

(Marginal Effect)

MedigapCoef (se) p value(Marginal Effects)

Ln of # of firms that offer Medigap plans in state

-.067 (.050) .175 -.718 (.184) 0.0(-.003)

# of Mandated Medigap RX plans

-.589 (.381) .122 3.67 (1.39) .008(.020)

Ln of # of type of mandated Medigap plans

.688 (.400) .085(.067)

-2.33 (1.21) .054(-.006)

LN of # of Medicare HMO by county

-.11 (.988) .209 -.134 (.134) .318

Medicaid buy-in in place -.419 (.247) .090(-.093)

.891 (.819) .277

FPL%*income -.575 (.168) .011(-.149)

-.056 (.150) .709

Medically needy plan in place .206 (.518) .691 -1.63 (2.04) .425

Medically needy*income .037 (.103) .721 .098 (.102) .338

State prescription drug program for disabled

-.224 (.100) .025(-.051)

-.201 (.211) .342

Other Significant Variables

Significant Control Variables

Medicaid Veterans eligibility (-), Age (-), White (-),Single (+), Mental illness (+), Mobility limitations (+), Cognitive limitations (+), Live alone (+), Male (-), Education level (-), State FE

Medigap Veteran eligibility (-), Age (+), White (+), Ever smoked (+), Education Level (+), State FE

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

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

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

Policy MedicaidCoef (se) p value

(Marginal Effect)

MedigapCoef (se) p value(Marginal Effects)

Ln of # of firms that offer Medigap plans in state

11.38 (.231) 0.0(1.46)

-4.28 (.233) 0.0(-.004)

# of Mandated Medigap RX plans

96.76 (2.89) 0.0(24.08)

47.95 (.529) 0.0(.002)

Ln of # of type of mandated Medigap plans

-204.63 (2.58) 0.0(-15.72)

-75.96 (.595) 0.0(.005)

LN of # of Medicare HMO by county

.111 (.219) .613 -.288 (.440) .513

Medicaid buy-in in place -.329 (.424) .438 42.15 (.453) 0.0(.034)

FPL%*income -.580 (.404) .151 -.015 (.341) .965

Medically needy plan in place 220.81 (1.27 ) 0.0(1)

87.17 (5.08) 0.0(2.34 e-24)

Medically needy*income -.050 (.254) .843 .032 (.289) .913

State prescription drug program for disabled

-.207 (.214) .334 -17.59 (.210) 0.0(-.014)

Does enrollment in supplemental policies affect health status?

• Outcome Equation

• Estimation challenges– Insurance variable may be correlated with

unobserved variables, selection conserns and error term

stateFESupplyinsOUi jijiji

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

Outcome DefinitionsVariable Calculation Mean (sd) InterpretationHealth status ∆

First year-most recent yr *(-1)

-.023 (1.002)

Positive number = improvement

Func status ∆

First year-most recent yr

.003 (1.631) Positive number = improvement

Func ∆Consumer wts

First year-most recent yr

8.052(490.846)

Positive number = improvement

Func ∆ expert wts

First year-most recent yr

1.482 (445.888)

Positive number = improvement

Significant Health Status EffectsSupplement Type Sample Health Outcome Coef (se) p value

Any Supplement Full Func ∆ Consumer wts

-305.23 (166.07) .066

Any Supplement Full Func ∆Expert wts

-314.29 (171.41) .067

Any Supplement MI Health ∆ -.901 (.358) .012

Any Supplement MI Func ∆ -1.18 (.710) .096

Medigap Mob Health ∆ -1.72 (.933) .065

Medigap Cog Func ∆ 4.57 (1.76) .009

HMO Supplement Mob Func ∆ Consumer wts

-438.33 (56.77).087

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

Rural Health Effects

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.