|
Meeting Enrollees’ Needs: How Do Medicare And Employer Coverage Stack Up?
One key issue in health reform concerns the relative roles of coverage offered through private insurance and public programs. This paper compares the experiences of aged Medicare beneficiaries with those of people under age sixty-five who have private employer coverage. Compared with the employer-coverage group, people in the Medicare group report fewer problems obtaining medical care, less financial hardship due to medical bills, and higher overall satisfaction with their coverage. Although access and bill payment problems increased across the board from 2001 to 2007, the gap between Medicare and private employer coverage widened.
A KEY ISSUE IN THE CURRENT HEALTH REFORM DEBATE is whether a public plan based on Medicare should be made available to employers and to individuals under age sixty-five.1 Advantages of private coverage include greater variety of benefit structures and greater flexibility in managing care and establishing provider networks. The advantage of Medicare is lower costs because of its purchasing power and public administration. Putting a public plan in competition with private plans for coverage of those under age sixty-five could yield a market with both greater choice and lower costs. This paper uses data from a health insurance survey conducted in 2007 to explore the ability of different sources of coverage to fulfill the two main purposes of health insurance: assuring access to care when needed, and protecting against financial hardship from medical bills. Results from 2007 also are compared with those from a previous survey in 2001.2
Data. The data are from the Commonwealth Fund 2007 Biennial Health Insurance Survey, a nationally representative telephone survey of 3,501 adults age nineteen and older living in the continental United States, conducted by Princeton Survey Research Associates International (6 June–24 October 2007).3 The survey consisted of twenty-five-minute interviews administered in the respondent’s choice of English or Spanish. The survey oversampled adults from telephone exchanges in geographic areas with a high density of low-income households. The analysis weights the final sample by age, sex, race/ethnicity, education, region, and household size, using the 2006 Annual Social and Economic Supplement of the U.S. census to be representative of the 213 million adults age nineteen and older living in the continental United States. The analysis sample of 3,456 adults (2,616 ages 19–64 and 840 age 65 and older) excludes forty-five respondents who did not provide an age. Sixty-two percent of those contacted for interviews agreed to participate. Counting eligible adults not reached by phone despite numerous attempts, the overall survey response rate was 47 percent.4 Key study variables and analysis. The survey included questions about access and health care experiences, out-of-pocket medical care spending, benefit characteristics, income, health status, insurance status, age, and other demographic characteristics. Following the methodology used in the 2001 survey, we categorized adults as follows: elderly Medicare beneficiary (age sixty-five and older), nonelderly adult (ages 19–64) with employer-based or individual coverage, Medicaid recipient, disabled Medicare recipient, or uninsured. In the analyses, we assigned nonelderly people with more than one source of coverage hierarchically to the employer, individual, Medicare, or Medicaid insurance categories; we also categorized Medicare beneficiaries with supplemental coverage, including Medicaid and supplemental retiree coverage, as Medicare enrollees. Throughout, we focus on comparisons between Medicare elderly and the experiences of nonelderly adults insured through employer-based plans.5 We also present results for the Medicare disabled and individually insured, but because of small samples for these groups (160 and 158, respectively), caution should be exercised in interpreting those results. We also present results for Medicaid enrollees and the uninsured, where applicable. Outcomes include ratings of insurance and quality of care, cost-related access problems, medical bill problems, and out-of-pocket spending.6 Key covariates in the regression analysis include health status, poverty, and prescription drug benefits. These were analyzed as mutually exclusive categorical variables. We first compared key demographic characteristics and responses to outcomes, and we note where differences between the Medicare elderly and the nonelderly with employer coverage are statistically significant (p < 0.05). We then used logistic regression to estimate the independent effects of insurance controlling for poverty, health status, and prescription drug coverage, and we indicate where estimates are significant at the 0.05, 0.01, or 0.001 levels. Odds ratios were transformed into adjusted proportions and expressed as percentages. We used STATA version 9.2 with the weighted survey estimator that adjusts the standard errors for clustering and the stratified sampling design.
Medicare beneficiaries and the privately insured under age sixty-five: demographics. The demographics of Medicare beneficiaries fundamentally differ from those whose primary source of coverage is private health insurance. People qualify for Medicare coverage if they or a spouse have sufficient lifetime work history and are age sixty-five or older or are permanently and totally disabled for two years or more. By contrast, those with private health insurance obtain coverage because they or a family member are working for an employer that provides coverage, are eligible for early-retiree coverage or maintain Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage through a former employer, or purchase health insurance through the individual market.7
Elderly Medicare beneficiaries are more likely than those with employer insurance to have health problems or low incomes, or both (Exhibit 1
Satisfaction with insurance. Elderly Medicare beneficiaries are the most satisfied with their insurance (Exhibit 2  ). Only 8 percent of them rated their insurance as "fair or poor," compared with 18 percent of those with employer insurance. Elderly Medicare beneficiaries also were less likely than others to report negative experiences with their insurance plan: 32 percent of them reported at least one negative insurance experience—including having expensive medical bills for non-covered services, being charged a lot more than insurance would pay, and physicians’ not taking their insurance—compared with 44 percent of those with employer coverage. Only 10 percent of elderly Medicare beneficiaries said that their physician didn’t take their insurance, compared with 17 percent of those with employer coverage.
Adjusted for income, health status, and prescription drug coverage, differences in insurance ratings between elderly Medicare beneficiaries and adults with employer coverage remain significant (p < 0.001; Exhibit 3 ). Notably, adults who lack a prescription drug benefit—regardless of insurance, income, and health status—were more likely than those with this benefit to rate their insurance as "fair or poor" (24 percent versus 16 percent, p < 0.05).
Access to care. In spite of having poorer health and lower incomes than the privately insured under age sixty-five, elderly Medicare beneficiaries were less likely to report access problems due to costs, including not filling a prescription, skipping a recommended medical test, forgoing needed specialist care, or having a medical problem but not visiting a doctor or clinic (Exhibit 2  ). One-fifth of elderly Medicare beneficiaries reported one of these problems, compared to 37 percent with employer insurance. Adjusted for income, health status, and prescription drug coverage (Exhibit 3), differences in experiencing cost-related access problems between elderly Medicare beneficiaries and adults with employer coverage are even greater. The uninsured are most at risk for access problems. People with low incomes, in poor health, without prescription drug coverage, or with chronic conditions are also at high risk of financial barriers to care, regardless of insurance status.
Financial pressure.
Despite lower incomes than others in the study, elderly Medicare beneficiaries reported fewer problems with medical bills, such as not being able to pay them, being contacted by a collection agency, or having to change their way of life to pay them (Exhibit 2
Adjusted for poverty, health, and prescription drug coverage (Exhibit 3 Respondents with Medicaid were least likely to report high out-of-pocket spending relative to income, while those with individually purchased insurance were most likely. Lower income, poorer health status, and chronic conditions are also associated with higher likelihood of burdensome out-of-pocket spending.
Quality of care.
Sixty-one percent of elderly Medicare beneficiaries said that they received excellent or very good quality of care in the past year, compared with just under half of those covered by employer-based plans (Exhibit 2
Adjusted for income, health status, and drug coverage (Exhibit 3 Lack of prescription drug coverage, poverty status, and health status all reduce the likelihood of being "very confident" about getting and paying for future care. The uninsured are the least likely to feel confident in their ability to get and afford care when needed.
Experience with insurance, access, and bills, 2001 versus 2007.
Between 2001 and 2007, access and bill problems increased for all adults, whether covered by employer-based insurance or Medicare. However, although the proportion of non-elderly adults with employer coverage who reported access problems was more than twice as high in 2001 as among elderly Medicare beneficiaries, the gap between the two groups (adjusted for poverty, health status, and prescription drug coverage) had widened by 2007 (Exhibit 4
These findings may reflect some important trends between 2001 and 2007, which was a period of rapid increases in health care costs and health insurance premiums. The proportion of firms offering health benefits declined, and employees’ deductibles and cost sharing under employer-based coverage increased.8 Medicare also changed substantially during that period. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 added a prescription drug benefit, available through private plans. The proportion of beneficiaries enrolled in private Medicare Advantage plans as an alternative to traditional Medicare increased from 14 percent in 2001 to 18 percent in 2007; higher payment rates have permitted plans to offer improved benefits.9
The 2007 survey results indicate that Medicare beneficiaries are more satisfied with their health care and experience fewer bill and access problems relative to the privately insured; these findings are consistent with those of the earlier 2001 survey. Satisfaction with coverage, of course, depends on its value relative to what enrollees perceive they are paying for coverage. Because Medicare benefits are heavily subsidized by taxpayers—with hospital benefits funded by payroll taxes and three-fourths of physician benefits funded by general revenues—high satisfaction may simply reflect beneficiaries’ assessment that the value far outweighs their own premium contributions. Beneficiaries also are unlikely to factor in the indirect economic cost of publicly subsidized coverage, such as possibly lower wages during their working years as a result of backward shifting of employer Medicare payroll taxes. Similarly, however, while employers typically cover 85 percent of individual workers’ coverage and 75 percent of family coverage, workers covered by employer-sponsored plans might or might not perceive that they pay indirectly for coverage through lower wages. The large majority of workers also express a preference for health benefits in lieu of cash compensation—perhaps related in part to the tax preferences accorded employer coverage.10 Medicare beneficiaries’ satisfaction may also be related to perceived security of coverage. In the study, Medicare beneficiaries were significantly more likely to say that they are very confident they will be able to afford the care they need. Once coverage is obtained, Medicare beneficiaries are not at risk of losing it. In contrast, those with employer-sponsored insurance may fear losing their job with its attendant coverage, employers’ restricting benefits, or higher employee premium shares in the future. The role of private supplemental insurance for Medicare beneficiaries must also be considered. Although Medicare’s Hospital Insurance (Part A) deductible and other cost-sharing provisions are well in excess of the cost sharing of most private employer plans, the vast majority of Medicare fee-for-service beneficiaries hold some form of supplemental coverage, through either employer-sponsored retiree plans, private Medigap plans, or Medicaid.11 Beneficiaries’ experiences undoubtedly reflect the combination of Medicare and supplemental coverage. In addition, beneficiaries enrolled in private Medicare Advantage plans as an alternative to traditional Medicare generally (but not always) have lower cost sharing and more generous benefits than people with typical employer plans. The statistical analysis controlled for the availability of prescription drug coverage beginning in 2006. However, the survey did not include details on supplemental and Medicare Advantage coverage and therefore could not identify the independent contribution of such coverage. Although there are too few disabled Medicare beneficiaries in this survey to enable definitive conclusions, the findings suggest that Medicare works better for the elderly than for the disabled. A previous study of the disabled on Medicare found that this group is particularly vulnerable and has increased need for comprehensive benefits.12 Further study of disabled Medicare beneficiaries is warranted to shed more light on this issue. Generational differences between elderly Medicare beneficiaries and the non-elderly privately insured also could contribute to our findings. The elderly may be more accepting of difficulties than younger adults. Satisfaction with health care and insurance, therefore, may reflect attitudinal differences, as well as different experiences. The bottom line, however, is that Medicare beneficiaries experience fewer problems obtaining needed care—an essential purpose of insurance coverage. Medicare beneficiaries are less likely than those covered by employer plans are to be told by their physicians’ offices that their coverage is not accepted. This is consistent with a Medicare Payment Advisory Commission (MedPAC) finding that Medicare beneficiaries are less likely to experience delays in obtaining an appointment with a primary care or a specialist physician and somewhat less likely to experience problems finding a specialist, compared to non-Medicare patients.13 Studies have found that consumer choice leads to higher satisfaction with coverage.14 The higher levels of satisfaction with care reported by Medicare beneficiaries compared with the privately insured found in this survey may also be partially attributable to the fact that Medicare often offers a greater choice of physicians and fewer restrictions than the private plans insuring most of the nonelderly.
Offering a choice of a Medicare-sponsored public plan with benefits similar to private employer or federal employee plans would build on Medicare’s wide provider network and experience in making accessible care available to enrollees at lower cost. Such an option could be particularly attractive to older adults seeking secure coverage that does not depend on health status. A survey of older adults ages 50–64 showed that nearly three-fourths were interested in becoming eligible for Medicare, including 68 percent of those covered by employer plans.15 The greater acceptance of Medicare coverage by physicians suggests that Medicare’s greater purchasing power facilitates choice of physicians and access to care, despite lower provider payment rates. This, combined with Medicare’s lower administrative costs, indicates that a public-plan option could offer employers and individuals under age sixty-five both improved access and lower costs. An actuarial premium for Medicare-sponsored insurance with benefits similar to those in the Federal Employees Health Benefits (FEHB) program standard-option Blue Cross Blue Shield plan could be 20–30 percent lower than the premium for typical employer plans.16 Depending on how it is financed, expanding eligibility for Medicare or offering a Medicare-sponsored public plan to a broader constituency may require sizable federal budget outlays. Care would need to be taken to ensure fair competition among the public and private plans. Adequate resources would have to be made available for the entity that would be responsible for managing the system through which plan choices would be offered and implemented: approximately forty million people would enroll in a Medicare-sponsored public plan if open to small businesses and individuals, making it essentially equal in size to Medicare today.17 Medicare has been proposed as a vehicle for developing payment reforms designed to encourage greater integration and organization of health care delivery and the provision of more-coordinated care, and for spreading such reforms to private plans.18 Sizable enrollment in a Medicare-sponsored plan available to the nonelderly would strengthen that role. Allowing Medicare the flexibility to develop and test alternative payment approaches in a more timely fashion would facilitate the ability of both public and private plans to learn from each other and share the results. IN THE POLICY DEBATES OVER MEDICARE'S FUTURE and over whether coverage of the uninsured should include a combination of public and private sources, listening to the experiences of individuals, whether covered by Medicare or by private employer insurance, is important. This study shows that in important ways, Medicare works better for its beneficiaries than does coverage available to those under age sixty-five. The better access to care experienced by Medicare beneficiaries is extremely important, given that they are disproportionately sicker and poorer than other populations.19 The data suggest that if a Medicare-sponsored public plan option were made available, many under age sixty-five might prefer it. The study also raises concerns about deterioration in employer coverage between 2001 and 2007, and whether private insurance is protecting the people most at risk: those with lower incomes or poor health. The growth in "high-deductible" plans (those qualifying for health savings accounts) may make it more difficult for low-income and chronically ill adults to obtain needed care.20 Higher cost sharing may also be problematic for chronically ill Medicare beneficiaries. Medicare serves its beneficiaries well in ensuring access to care. Beneficiaries do not experience the administrative hassles in getting claims paid that are more often found in private plans. Medicare provides security in continuity of coverage that is not typically found in private insurance. Providing a Medicare-sponsored option to the nonelderly could increase the continuity of coverage and bolster confidence that people will be able to get and afford health care when they need it. Most importantly, building on Medicare as an option for working-age adults could contribute to greater competition between public and private coverage sources, making both more responsive to the needs of enrollees.
Karen Davis (kd{at}cmwf.org) is president of the Commonwealth Fund in New York City. Stuart Guterman is assistant vice president, Medicare’s Future, at the Commonwealth Fund. Michelle Doty is director of survey research there, and Kristof Stremikis is research associate to the president. The authors thank the anonymous reviewers for their constructive comments. The views presented are those of the authors and should not be attributed to the Commonwealth Fund, its directors, or its officers.
Read all Comments
| ||||||||||||||||||||||||||||||||||||||||||||
Top
Study Data And Methods
Study Results
