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

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

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) –Longitudinal –Self-report and claims State Policy : AARP Public Policy Institute Oct 1999 #9915. Area Resource File (ARF)

Sample Disabled observations from –8000+ Sample for insurance estimation –Unique observations =4254 Sample for outcomes estimation –Individuals with more than one year =2746

Sample Demographics CharacteristicSampleDisabledAged Single68%59%44% White75%67%81% Male58%55%43% Rural30%26%23% Income < $10,00040%NA17% Education Less than HS HS Grad More than HS 38% 37% 25% 34% 31% 34% 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 Status Change Choice Characteristics Dependent Variable 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 equation Pr(y=1|x)= exp(α+βx) 1+ exp(α+βx) J=1, 2, 3, 4, 5

Results: Effect of State Policies on Enrollment in Medicaid or Medigap R 2 =.2361 (N=3074) PolicyMedicaid Coef (se) p value (Marginal Effect) Medigap Coef (se) p value (Marginal Effects) Ln of # of firms that offer Medigap plans in state (.050) (.184) 0.0 (-.003) # of Mandated Medigap RX plans (.381) (1.39).008 (.020) Ln of # of type of mandated Medigap plans.688 (.400).085 (.067) (1.21).054 (-.006) LN of # of Medicare HMO by county -.11 (.988) (.134).318 Medicaid buy-in in place-.419 (.247).090 (-.093).891 (.819).277 FPL%*income-.575 (.168).011 (-.149) (.150).709 Medically needy plan in place.206 (.518) (2.04).425 Medically needy*income.037 (.103) (.102).338 State prescription drug program for disabled (.100).025 (-.051) (.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 Disabled R 2 =.3019 (N=954) PolicyMedicaid Coef (se) p value (Marginal Effect) Medigap Coef (se) p value (Marginal Effects) Ln of # of firms that offer Medigap plans in state (.231) 0.0 (1.46) (.233) 0.0 (-.004) # of Mandated Medigap RX plans (2.89) 0.0 (24.08) (.529) 0.0 (.002) Ln of # of type of mandated Medigap plans (2.58) 0.0 (-15.72) (.595) 0.0 (.005) LN of # of Medicare HMO by county.111 (.219) (.440).513 Medicaid buy-in in place-.329 (.424) (.453) 0.0 (.034) FPL%*income-.580 (.404) (.341).965 Medically needy plan in place (1.27 ) 0.0 (1) (5.08) 0.0 (2.34 e-24) Medically needy*income-.050 (.254) (.289).913 State prescription drug program for disabled (.214) (.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

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 Definitions VariableCalculationMean (sd)Interpretation Health status ∆ First year-most recent yr *(-1) (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 ( ) Positive number = improvement Func ∆ expert wts First year-most recent yr ( ) Positive number = improvement

Significant Health Status Effects Supplement TypeSampleHealth OutcomeCoef (se) p value Any SupplementFullFunc ∆ Consumer wts (166.07).066 Any SupplementFullFunc ∆ Expert wts (171.41).067 Any SupplementMIHealth ∆-.901 (.358).012 Any SupplementMIFunc ∆-1.18 (.710).096 MedigapMobHealth ∆-1.72 (.933).065 MedigapCogFunc ∆4.57 (1.76).009 HMO SupplementMobFunc ∆ Consumer wts (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.