Health Insurance, Utilization and Mortality: Evidence from Medicare's Origins
Kenneth Chay (Brown University, Department of Economics and Community Health)
Monday, 11/07/2011. ARCHIVED EVENT
Location: 6050 ISR Thompson St
We examine Medicare’s impact on hospital insurance, utilization and mortality rates. The analysis applies an “age discontinuity” design to data both before and after Medicare’s introduction. We find that Medicare: i) increased hospital utilization and costs among the elderly, but at a lower rate than previously found; and ii) significantly increased life expectancy in the eligible population. The mortality reductions exhibit an age discontinuity only after Medicare's introduction – patterns not found in nations that did not introduce a Medicare-style program in the 1960’s – with deaths due to heart disease and stroke accounting for most of these reductions. We estimate that Medicare’s introduction had a cost-per-life year ratio below $200 (in 1982-84 dollars). We also analyze changes over time in Medicare’s impact and the characteristics of the "marginal" person who benefited from coverage. We find that the age-65 discontinuity in insurance rates fell over time, more so for blacks, the less-educated, poor and disabled; and that Medicare’s salience rises in recessions. We present evidence that the benefit-cost ratios of Medicare fell during the 1980s, partly due to changes in Medicare’s reimbursement formula.