Do public policies that expand coverage hurt those who already have insurance, such as older adults with existing Medicare coverage? That's the question examined in a study published in August 2017 in the American Economic Journal: Economic Policy. The study was authored by health economists Melissa McInerney, Jennifer Mellor, and Lindsay Sabik. Mellor is a faculty member in the William & Mary Economics Department and directs the College’s Schroeder Center for Health Policy. McInerney and Sabik are faculty members at Tufts University and the University of Pittsburgh, respectively.
The study focused on insurance coverage expansions that took place in the 2000s as some states expanded their Medicaid programs to include more working-age adults. Since some states expanded while others did not, and since the size and timing of the state expansions also varied, this created a natural experiment that the study authors used to tease out the consequences of expanding Medicaid to working-age adults. The study authors looked to see how older adults – those already on Medicare and not the target of state Medicaid expansions – fared when more working-aged adults gained access to insurance. Would seniors have a tougher time getting doctor appointments for primary care and preventive care, perhaps because of crowded waiting rooms? Would this translate to unnecessary hospitalizations, and declines in health? These questions had sparked a number of criticisms of the Affordable Care Act in its early years.
For the most part, the answers were, “no,” but that was not the whole story. The typical older adult living in a state that expanded coverage to working-age adults saw very little change in healthcare utilization. But some older Medicare beneficiaries did see significant declines in healthcare use, as measured by the total amount of their healthcare spending and the amount paid by Medicare in a given year. The largest declines for these adults occurred for inpatient hospital care, but outpatient care, including office visits, also decreased. The affected seniors turned out to be a subset of Medicare beneficiaries called “dual eligibles” because they are enrolled in both the Medicare program (due to their age) and the Medicaid program (by nature of having low incomes).
"It makes sense that we found reductions only among the dual eligibles,” said Jennifer Mellor. “Low-income seniors or duals tend to visit the same healthcare providers that low-income working age adults visit, since both groups live in the same communities and see providers accessible to those communities… so when some providers see an influx of insured patients, it’s the other patients treated by these providers who stand to be affected by any changes,“ she continued.
Even more interesting is the fact that dual eligibles did not show signs of worsening health as a result of this drop in healthcare use. The authors’ methods ruled out certain other causes of the drop in healthcare spending before honing in on an explanation supported by their data. “It looks like providers’ treatment styles respond to the influx of new Medicaid patients – since Medicaid patients often have less generous coverage, this leads providers to be more cautious with their treatment, and this cautiousness spills over to other patients they treat,” said Melissa McInerney. She continued, “Earlier studies found that this type of practice style spillover happens when providers get an influx of managed care patients, and then change the way they treat patients with more generous fee-for-service insurance … Our study is the first to find evidence of this spillover from the Medicaid program to the Medicare program.”
What does all this mean for healthcare under the Affordable Care Act? The authors interpret their findings as evidence that the ACA’s Medicaid expansions would also have little effect on the average Medicare beneficiary, and that worries about seniors being shut out of doctors’ offices thanks to the law were unfounded. As Lindsay Sabik puts it: "Based on our results, we see no reason to think that the typical Medicare beneficiaries would see any change in their healthcare access, and no reason to think that any Medicare beneficiary would see a decline in their health. This means that instead of focusing on unfounded worries about the law, policymakers can focus on fixes to real problems."
For more information, the full article can be obtained here.