Working Paper: NBER ID: w20045
Authors: Sherry A. Glied
Abstract: Doctors and hospitals in the United States serve patients covered by many types of insurance. This overlap in the supply of health care services means that changes in the prices paid or the volume of services demanded by one group of patients may affect other patient groups. This paper examines how marginal shifts in the demand for services among the adult population under 65 (specifically, factors that affect the uninsurance rate) affect use in the Medicare population.\n\nI provide a simple theoretical framework for understanding how changes in the demand for care among adults under 65 may affect Medicare spending. I then examine how two demand factors-recent coverage eligibility changes for parents and the firm size composition of employment-affect insurance coverage among adults under 65 and how these factors affect per beneficiary Medicare spending. Factors that contribute to reductions in uninsurance rates are associated with contemporaneous decreases in per beneficiary Medicare spending, particularly in high variation Medicare services. \n\nReductions in the demand for medical services among adults below age 65 are not associated with reductions in the total quantity of physician services supplied. The increased Medicare utilization that accompanies lower demand among those under 65 has few, if any, benefits for Medicare patients.
Keywords: health care; Medicare; uninsurance; demand shifts
JEL Codes: I1; I11; I13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased Medicare utilization accompanying lower demand among the under-65 population (H51) | no significant benefits for Medicare patients (I13) |
| reductions in the uninsurance rate among adults under 65 (I13) | decrease in per beneficiary Medicare spending (H51) |
| increases in the share of larger employers (J79) | reductions in the uninsurance rate (I13) |
| increases in the share of larger employers (J79) | decrease in per beneficiary Medicare spending (H51) |