Medicare Growth, Technological Advances, and the Distribution of Health Care Benefits

Jonathan Skinner

Weiping Zhou

A Simple Question

Have the billions of health care dollars spent during the 1990s improved or

worsened inequality in health and well-being in the elderly population?

A Not So Simple Answer

Expenditures/utilization for health care: High income people get:

• Less (Battachyaria and Lakdawalla, 2003))

• More (Le Grand, 1982; McClellan and Skinner, 2003, Sanchez et. al., 1992).

A Not So Simple Answer

Improvements in Outcomes: High education / non-minority people get

• Less (McDermott, 1978)

• More ( (Glied and Lleras-Muney, 2003; Goldman and Smith, 2002; Lichtenberg and Lleras-Muney, 2002)

A Not So Simple Answer

Improvements in Outcomes: High education / non-minority people get

• Less (McDermott, 1978)

• More ( (Glied and Lleras-Muney, 2003; Goldman and Smith, 2002; Lichtenberg and Lleras-Muney, 2002)

How do you measure inequality in health or in full income anyway?

Our Strategy

• Expenditures: Fuchs proto-full income measure (Medicare expenditures plus adjusted CPS income) – Data sources: Current Medicare History Survey (CMHS), CPS

Our Strategy

• Expenditures: Fuchs proto-full income measure (Medicare expenditures plus adjusted CPS income) – Data sources: Current Medicare History Survey (CMHS), CPS

• Outcomes: CMHS

• Utilization: Cooperative Cardiovascular Project (CCP) data on heart attack patients (1994/95)

Two measures of income: per capita family (CPS) and zip code (CMHS, CCP)

Percentage Increase in Money Income 1992-2001

0

5

10

15

20

25

30

Percent

MoneyIncome

Full Income(1)

Full Income(2)

Low IncomeMiddle IncomeHigh Income

Percentage Increase in Full Income (1): Money Income plus Medicare Expenditures, 1992-2001

0

5

10

15

20

25

30

Percent

MoneyIncome

Full Income(1)

Full Income(2)

Low IncomeMiddle IncomeHigh Income

Medicare Expenditures (Males Age 80-84) 1987 and 1997, by Income Decile

Source: McClellan and Skinner, 2003

3000

3500

4000

4500

5000

5500

6000

6500

7000

7500

8000

1 2 3 4 5 6 7 8 9 10

Income Decile

Med

icar

e E

xpen

dit

ure

s

1997

1987

How Big is a Big Twist?

• Decile 10 spending increase ($3300) less Decile 1 spending increase ($1600)

0200400600800

100012001400160018002000

Medicare

EITC

How Big is a Big Twist?

• Decile 10 spending increase ($3300) less Decile 1 spending increase ($1600)

•Average EITC Payments per family receiving EITC (1997) Source: Brookings-Urban Website

0200400600800

100012001400160018002000

Medicare

EITC

Average Home Health Care Spending By Decile 1987-2001: Men Age 80-84 in 1987

1997$

0

500

1000

1500

2000

2500

1987

1989

1991

1993

1995

1997

1999

2001

Lowest IncomeDecile

Highest IncomeDecile

Home Health Care Expenditures 1996 by Region

Next Measure: Changes over time in Income Including Lifespan

How Does One Place a Dollar Value on Lifespan Extension?

Approach number 1: value gains in life-years for low income households by more (Cost-Benefit Analysis)

Approach number 2: Value gains in life-years for low income households by less (Becker et. al. “WTP”)

10-Year Survival Rates Rose in Highest Income Deciles by More than in Lowest Income Deciles

0.62

0.64

0.66

0.68

0.7

0.72

0.74

0.76

0.78

0.8

0.82

1 2 3 4 5 6 7 8 9 10

Income Decile

10-y

ear

Su

rviv

al R

ate

1982-91

1992-2001

Percentage Increase in Full Income (2): Money Income plus Value of Life Extension, 1992-2001

0

5

10

15

20

25

30

Percent

MoneyIncome

Full Income(1)

Full Income(2)

Low IncomeMiddle IncomeHigh Income

A Third Approach: Focus on Utilization of “Effective” Technological Innovations

Causes of 90-Day AMI Mortality Decline, 1975-1990Source: Heidenrich and McClellan, 2001

AspirinBeta BlockerThrombolyticsACE InhibitorsPrimary PTCA

No Significant Impact: CABG, calcium antagonists, PTCA (non-primary), nitrates, anticoagulants, etc.

Effective Care Following AMI: By Zip Code Income

Beta Blocker

ACE Inhibitor

Reper-fusion

Smoking Cessation Advice

Decile 1 40 57 32 33

Decile 10 47 59 37 35

Difference 7 2 5 2

Percent of “Ideal” Patients Receiving Beta Blockers at Discharge Percent of “Ideal” Patients Receiving Beta Blockers at Discharge Following AMI (1994-95)Following AMI (1994-95)

Beta Blocker Use By RegionSource: Dartmouth Atlas

0.00.0

20.020.0

40.040.0

60.060.0

80.080.0

100.0100.0

Income per Capita in 2000 andAverage 1-Year AMI Mortality (1989-2000) by State

AL

AR

AZ

CA

CO

CT

DE

FL

GA

IAID

ILIN

KS

KY

LA

MA

MD

ME

MI

MN

MO

MS

MT

NC

ND

NE NH

NJ

NM

NVNY

OH

OK

OR PA

RI

SC

SD

TN

TX

UT

VA

VT

WAWI

WV

WY

-.06

-.04

-.02

6.94

e-18

.02

Adj

uste

d O

ne-Y

ear

Mor

talit

y P

ost-

MI

20000 25000 30000 35000 40000per capita income (nominal), 2000

Putnam’s Social Capital Index andAverage 1-Year Mortality (1989-2000) by State

AL

AR

AZ

CA

CO

CT

DE

FL

GA

IAID

ILIN

KS

KY

LA

MA

MD

ME

MI

MN

MO

MS

MT

NC

ND

NENH

NJ

NM

NVNY

OH

OK

ORPA

RI

SC

SD

TN

TX

UT

VA

VT

WAWI

WV

WY

-.06

-.04

-.02

6.94

e-18

.02

Adj

uste

d O

ne-Y

ear

Mor

talit

y P

ost-

MI

-1 0 1 2Soc Cap Index, Putnam

Medicare Expenditures (Age 70-74 M) by Year (1982-91 or 1992-2001)

0

1000

2000

3000

4000

5000

6000

7000

1 2 3 4 5 6 7 8 9 10Year

$199

6 E

xpen

dit

ure

s Decile 1 in 1992Decile 10 in 1992

Decile 1,10 in 1982