Expanding health coverage might not cost as much as policymakers assume, according to a new study.
The study, released Tuesday by the Commonwealth Fund, was conducted by researchers at Harvard Medical School. It shows that individuals who were either continuously or intermittently uninsured between the ages of 51 and 64 cost Medicare more than those who had continuous insurance coverage in the years prior to Medicare eligibility.
On average, those who were previously uninsured cost Medicare an additional $1,000 annually per person when compared with those who had been consistently covered. These increased costs were due primarily to complications resulting from cardiovascular disease and diabetes and from apparently delayed surgeries for arthritis, the study found.
According to authors of the study, this is the first published study to use actual Medicare claims data to demonstrate how expanding health insurance coverage before age 65 may lead to lower Medicare spending after age 65.
The researchers estimate that filling in the coverage gaps for adults who are uninsured between ages 51 to 64 would cost $197 billion due to greater healthcare use before 65. However, the increase in healthcare for this same group would potentially reduce subsequent Medicare spending by $98 billion, with an overall net cost of $99 billion.
Typically, when the costs of covering the uninsured are calculated, analysts focus on the increased use of healthcare associated with gaining coverage but not the resulting health benefits, authors of the study said. These health gains may be substantial, particularly for those with treatable medical conditions.
"Providing health insurance coverage to older uninsured adults may not cost as much as previously thought," said Michael McWilliams, lead author of the study and an assistant professor at Harvard Medical School.
Researchers used the Health and Retirement Study, a nationally representative longitudinal survey that collected health insurance and other information from a large sample of adults and Medicare claims data to conduct the study.
"The bulk of the higher spending was explained by chronic conditions we know how to treat, which makes perfect clinical sense." said McWilliams. "When uninsured adults do not receive adequate care for hypertension, heart disease and diabetes before age 65, they develop complications that require costlier care after age 65."
Commonwealth Fund President Karen Davis said the debate over health reform has focused on its costs rather than its benefits. "This important study shows that closing the gaps in health insurance coverage for older adults can have important benefits in controlling chronic conditions early on-contributing to better health and lower cost once they reach age 65 and qualify for Medicare," she said. "These findings point to the urgent need to act on comprehensive health reform to ensure secure and stable coverage for all Americans, and slow the rise in healthcare costs for employers, families and government."
According to senior author John Ayanian, a professor of healthcare policy and medicine at Harvard Medical School and Brigham and Women's Hospital and a professor of health policy and management at the Harvard School of Public Health, the study suggests that not only are there substantial health benefits to expanding coverage, but the economic cost may not be as steep as previously thought.
"These potential economic benefits to the Medicare program are important to consider when evaluating proposals to expand coverage before age 65," he said.