Health insurance and the elderly.

The effectiveness of proposed changes to the Medicare program depends on consumers' responses to different market incentives, which vary according to the coverage the elderly possess to supplement their Medicare coverage. This Data Watch explores the extent of supplemental insurance among the elderly, based on a new data set from the Medicare Current Beneficiary Survey. Only 11 percent of Medicare beneficiaries have only Medicare as their source of coverage; the rest of the elderly population is covered by either private coverage (employer-sponsored retiree coverage or individually purchased coverage) or Medicaid. An increase in Medicare cost sharing would likely affect one-third of elderly beneficiaries, which calls into question the effectiveness of this approach to Medicare program reform.

Private health insurance: new measures of a complex and changing industry.

Private health insurance benefit payments are an integral component of estimates of national health expenditures. Recent analyses indicate that the insurance industry has undergone significant changes since the mid-1970's. As a result of these study findings and corresponding changes to estimating techniques, private health insurance estimates have been revised upward. This has had a major impact on national health expenditure estimates. This article describes the changes that have occurred in the industry, discusses some of the implications of those changes, presents a new methodology to measure private health insurance and the resulting estimate levels, and then examines concepts that underpin these estimates.

Private health insurance plans in 1978 and 1979: a review of coverage, enrollment, and financial experience.

The private health insurance industry collected $55.9 billion in premiums in 1979 and returned $50.2 billion in benefits to its subscribers. Premiums rose 12.4 percent, slightly faster than in 1978 when premiums rose 11.4 percent, to $49.7 billion. Benefits rose 11.4 percent in 1979, down from the 12.6 rate in 1978. After operating expenses were deducted, the industry showed underwriting losses of $1.4 billion in 1979 and $1.5 billion in 1978. About 78 percent of the population was insured for hospital care, 76 percent for x-ray and laboratory examinations, and about 76 percent for surgical services in 1979. Smaller percentages had coverage for other types of care. An estimated 64 percent of the aged bought private hospital insurance, and about 43 percent bought surgical insurance, mostly to supplement Medicare benefits. An estimated 12 percent of persons under age 65 had no protection against the cost of hospital care either through private insurance or a public program such as Medicare or Medicaid.

Private health insurance plans in 1977: coverage, enrollment, and financial experience.

The private health insurance industry collected $47.1 billion in premiums in 1977 and returned $41.6 billion in benefits to their subscribers. Premiums rose 16.3 percent as a direct consequence of rapid claims growth in 1976. After operating expenses were deducted, the industry showed a small, $.4 billion underwriting loss. About 78 percent of the population were insured for hospital care, and about 76 percent for surgical services. Smaller percentages had coverage for other types of care. An estimated 61.8 percent of the aged bought private hospital insurance, and 47.1 percent bought surgical insurance, mostly to supplement Medicare benefits. About 12 percent of persons under age 65 had no protection against the cost of hospital care either through private insurance or a public program such as Medicare or Medicaid.

Self-insured health plans.

Nationwide, 8 percent of all employment-related health plans were self-insured in 1984, which translates into more than 175,000 self-insured plans according to our latest study of independent health plans. The propensity of an organization to self-insure differs primarily by its size, with large establishments more likely to self-insure. In the overwhelming majority of cases, the self-insured benefit was hospital and/or medical. Among employers who self-insure, 23 percent self-administer, and the remaining 77 percent hire a commercial insurance company, Blue Cross/Blue Shield plan, or an independent third-party administrator to administer the health plan.

Health expenditures by age group, 1977 and 1987.

In recent years, concern has increased over the rapid growth of health care spending, especially spending on behalf of the aged. In 1987, those 65 years or over comprised 12 percent of the population but consumed 36 percent of total personal health care. This article is an examination of the current and future composition of the population and effects on health care spending. National health accounts aggregates for 1977 and 1987 are split into three age groups, and the consumption patterns of each group are discussed. The variations in spending within the aged cohort are also examined.

Health spending trends in the 1980's: adjusting to financial incentives.

Health expenditure growth is projected to moderate considerably during 1983-90, reaching $660 billion in 1990 and consuming over 11 percent of the gross national product. During 1973-83, spending for health care more than tripled, increasing from $103 billion to $355 billion and moving from 7.8 percent to 10.8 percent of the gross national product. Government spending for health care is projected to reach $284 billion by 1990, with the Federal Government paying 73 percent. The Medicare Prospective Payment System, private sector initiatives, and State and local government actions are providing incentives to substantially increase competition and cost effectiveness in health care provision.

Projections of health care spending to 1990.

National health expenditures are projected to grow to $640 billion by 1990, 11.3 percent of the gross national product. Growth in health spending is expected to moderate to an 8.7 percent average annual rate from 1984 to 1990, compared with a 12.6 percent rate from 1978 to 1984. These projections assume lower estimates of overall economic price growth, lower use of hospital care, and increased use of less expensive types of care. A preliminary analysis of demographic factors reveals that the aging of the population has almost as great an impact as the growth in total population on projected expenditures for many types of health care services.

Measuring input prices for physicians: the revised Medicare Economic Index.

Medicare payments for physician services under Part B were historically restrained by capping prevailing charges using the Medicare Economic Index (MEI). The MEI, an input price index for physician services that incorporates an adjustment for economywide labor productivity, has not undergone a major revision since 1975. The MEI is an important determinant of the annual volume performance standard that will be used to set aggregate increases in the revised system for paying physicians under Medicare beginning in 1992. The MEI will also be used in establishing the annual changes to the payment conversion factors under the new payment system.

Health insurance and the elderly: data from MCBS (Medicare Current Beneficiary Survey).

This article shows the supplemental insurance distribution and Medicare spending per capita by insurance status for elderly persons in 1991. The data are from the Medicare Current Beneficiary Survey (MCBS) and Medicare bill records. Persons with Medicare only are a fairly small share of the elderly (11.4 percent). About three-fourths of the Medicare elderly have some form of private insurance. The share with Medicaid is 11.9 percent, which has increased recently as qualified Medicare beneficiaries (QMBs) started to receive partial Medicaid benefits. In general, Medicare per capita spending levels increase as supplemental insurance comes closer to first dollar coverage. When the data were recalculated to control for differences in reported health status between the insurance groups, essentially the same spending differences were observed.

Measuring hospital input price increases: the rebased hospital market basket.

The input prices indexes used in part to set payment rates for Medicare inpatient hospital services in both prospective payment system (PPS) and PPS-excluded hospitals were rebased from 1982 to 1987 beginning with payments for fiscal year 1991. In this article, the issues and evidence used to determine the composition of the revised hospital input price indexes are discussed. One issue is the need for a separate market basket for PPS-excluded hospitals. Also, the payment implications of using hospital-industry versus economywide measures of wage rates as price proxies for the growth in hospital wage rates are addressed.

Reconciling medical expenditure estimates from the MEPS and the NHA, 1996.

This article compares 1996 estimates of national medical care expenditures from the Medical Expenditure Panel Survey (MEPS) and the National Health Accounts (NHA). The MEPS estimate for total expenditures in 1996 was $548 billion; whereas, the NHA estimate for personal health care (PHC) in 1996 was $912 billion. Much of this apparent difference, however, arises from differences in scope between MEPS and NHA--rather than from differences in estimates for comparably-defined expenditures. We adjusted the NHA for differences in included populations and types of services covered, finding a much smaller difference between MEPS and a comparably-defined NHA.

National health expenditures, 1988. Office of National Cost Estimates.

Every year, analysts in the Health Care Financing Administration present figures on what our Nation spends for health. As the result of a comprehensive re-examination of the definitions, concepts, methods, and data sources used to prepare those figures, this year's report contains new estimates of national health expenditures for calendar years 1960 through 1988. Significant changes have been made to estimates of spending for professional services and to estimates of what consumers pay out of pocket for health care. In the first article, trends in use of and expenditure for various types of goods and services are discussed, as well as trends in the sources of funds used to finance health care. In a companion article, the benchmark process is described in more detail, as are the data sources and methods used to prepare annual estimates of health expenditures.

The Medical Expenditure Panel Survey: a national health information resource.

This article describes the Medical Expenditure Panel Survey (MEPS), the third in a series of nationally representative surveys of medical care use and expenditures sponsored by the Agency for Health Care Policy and Research. The MEPS is designed to provide extensive data on the types of health care services American use, how frequently they use them, how much is paid for the services, and who pays for them. It also will provide information on the types and costs of private health insurance available to the U.S. population. The survey is unparalleled in its degree of detail, as well as its ability to link medical care use, payments, and health insurance coverage to specific survey respondents and their families. It allows analysts to examine how individual and family characteristics, including the characteristics of their health insurance, affect medical care use and spending. This article discusses each of the MEPS components, focusing on design enhancements that have been made since the survey was last conducted nearly a decade ago.

Why more cost-sharing won't slow Medicare spending.

In considering ways to slow the growth in Medicare expenditures, policymakers have concluded that increasing point-of-service cost-sharing for patients will reduce demand for health services. Under the current system, Medicare beneficiaries faced with increased cost-sharing can reduce their demand for services or purchase additional private insurance. New data from the 1991 Medicare Current Beneficiary Survey show that high-income persons protect themselves from out-of-pocket costs by purchasing private supplemental insurance. Surprisingly, the data also reveal that many low-income persons also purchase private insurance, demonstrating that the elderly--whatever their income level--consider supplementary insurance more of a necessity than a luxury. Thus, it appears that increased beneficiary cost-sharing would have a limited effect on Medicare spending growth.