Pent-Up Demand and the Discovery of New Health Conditions after Medicare Enrollment
- Presenter:
Chair: Willard Manning; Discussant: TBA Mon June 5, 2006 15:30-17:00 Room 121
Recent evidence using hospital discharge data has shown increases in many forms of medical care utilization after age 65. Other work using longitudinal data has shown that those who are uninsured prior to Medicare enrollment experience larger increases in the utilization of certain types of preventive and curative care once on Medicare than those who were continuously insured. Increases in utilization upon obtaining insurance coverage may occur because the previously uninsured have known health conditions that have not received proper treatment or because the increased use of medical care leads to the new diagnosis of conditions. The “discovery effect” refers to the latter, the knowledge one gains about individual health status upon obtaining access to medical care. This effect predicts that increases in utilization after Medicare will lead to more new diagnoses among those who lacked insurance coverage before age 65 than those who had coverage.
Longitudinal data from the 1992-2004 waves of the Health and Retirement Study (HRS) are used to follow a panel of individuals as they progress from ages 56-61 to Medicare enrollment at age 65 and then for several years after age 65. At each interview, HRS respondents are asked whether a doctor has ever told them that they have: a heart condition, a lung condition, high blood pressure, diabetes, cancer, stroke, or arthritis. Because the discovery effect occurs as a result of increased medical care utilization, it is expected that the incidence of new diagnoses will be higher in the years immediately following Medicare enrollment. In order to test the discovery effect hypothesis, Cox models with time-varying covariates are used to assess the differential rate of diagnosis after age 65 by insurance status prior to Medicare.
Results in this paper indicate that the increased utilization experienced after age 65 by those who were uninsured prior to Medicare leads to an elevated hazard of diagnosis (relative to the insured) for virtually every chronic condition considered, for both men and women. The magnitudes of these effects are clinically meaningful; differential increases after Medicare are between 20% and 400% larger among the previously uninsured compared to the insured. These effects are particularly strong for men with heart conditions and for women with lung conditions or cancer. Estimates from Cox models also show that the previously uninsured are less likely to be diagnosed compared to those who were insured in the years prior to Medicare.
The additional diagnoses of chronic conditions among the previously uninsured after age 65 confirms that the uninsured are sicker than the insured, and that lack of access to medical care while uninsured results in untimely diagnoses. Though the uninsured are sicker, they have lower levels of chronic conditions prior to Medicare enrollment due to this lack of diagnosis. Thus, judging the relative health of the uninsured by considering only the presence of chronic conditions in a cross-section is a poor way to assess relative health status and will make the uninsured look healthier than they actually are.
