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Estimating Regression-Based Medical Care Expenditure Indexes for Medicare Advantage Enrollees

Anne E. Hall

Abstract

I construct a disease-based medical expenditure index for Medicare Advantage (private plan) enrollees using data from the Medicare Current Beneficiary Survey from 2001 to 2009. I create the indexes by modeling total health-care expenditure as a function of each respondent’s diagnoses. Total medical inflation for this population is found to be 5.7 percent annually. By comparison, medical inflation in the Medicare fee-for-service (FFS) population is 4.5 percent annually. The difference is partly due to differential reporting of drug and nondrug spending in the MCBS for FFS beneficiaries; once this is corrected for, inflation among FFS beneficiaries is 5.0 percent. The remaining difference results from drug spending increasingly more rapidly among Medicare Advantage enrollees. I show that the introduction of Part D accounts for much of, and possibly all the remaining gap in inflation.

Acknowledgments:

I would like to thank Tina Highfill for outstanding research assistance and would also like to thank the following people for helpful comments and advice: Ana Aizcorbe, Ernie Berndt, Michael Chernew, David Cutler, Abe Dunn, Joe Newhouse, Allison Rosen, and two anonymous referees. The views expressed in this paper are solely those of the authors and do not necessarily reflect the views of the Bureau of Economic Analysis.

Appendix

Appendix Table 1:

List of Medical Conditions and Associated MCBS Questionnaire Variables.

Medical conditionsCommunity interview variableFacility interview variable
Hardening of arteries/arteriosclerotic heart diseaseOCARTERYASHD
HypertensionD_HBPHYPETENS
Hypercholesterolemia (2009 only)D_CHOLESn/a
Myocardial infarction/Heart attackD_MYOCARMYOCARD and must have inpatient event in past year
Angina/CHDD_CHDCRDVTYPE
Other heart conditions, valve problemD_OTHHRT or D_VALVECARDIOV and CRDVTYPE=“NO”
Congestive heart failureD_CFAILHRTFAIL
Heart rhythm problemD_RHYTHMCARDDYSR
Stroke/transient ischemic attack (TIA)D_STROKESTROKE or TIA
CancerD_CSKIN or D_CANCER and one or more of (OCCLUNG, OCCCOLON, OCCBREST, OCCPROST, OCCOVARY, OCCSTOM, OCCCERVX, OCCKIDNY, OCCBRAIN, OCCTHROA, OCCBACK, OCCHEAD, OCCFONEC, OCCBLAD, OCCUTER, OCCOTHER)CNRSKIN or CNRLUNG or CNRBOWEL or CNRBREAS or CNRPROST or CNROVARY or CNRCERVI or CNRSTOMA or CNRBLADD or CNRUTERU or CNROTHER
DiabetesOCDIABTSDIABMEL
ArthritisOCARTHRH or D_ARTHRDARTHRIT
Mental/psychiatric disorderD_PSYCHANXIETY or DEPRESS or MANICDEP or SCHIZOPH
Alzheimer’s/dementiaOCALZHMRALZHMR or DEMENT
OsteoporosisOCOSTEOPOSTEOP
Broken hipD_BRKHIPHIPFRACT
Parkinson’sOCPARKINPARKNSON
Emphysema/asthma/chronic obstructive pulmonary disease (COPD)OCEMPHYSEMPCOPD or ASTHMA
Paralysis in past yearD_PPARALHEMIPLPA or PARAPLEG or QUADPLEG

Appendix Table 2:

Probit Model of Hypercholesterolemia among Medicare Advantage Enrollees in the 2009 MCBS Community Survey.

Respondent reports having been diagnosed with hypercholesterolemia
Respondent reports having been diagnosed with:
 Hardening of arteries/arteriosclerotic heart disease0.221***
(0.00229)
 Hypertension0.663***
(0.00137)
 Myocardial infarction0.360***
(0.00537)
 Angina/Coronary heart disease0.456***
(0.00464)
 Other heart conditions, valve problem0.255***
(0.00322)
 Congestive heart failure–0.635***
(0.00500)
 Heart rhythm problem0.139***
(0.00306)
 Stroke/transient ischemic attack0.285***
(0.00492)
 Skin cancer0.174***
(0.00271)
 Lung cancer–0.0814***
(0.0140)
 Colon cancer–0.0729***
(0.00696)
 Breast cancer0.442***
(0.00766)
 Prostate cancer0.434***
(0.00744)
 Other cancer0.156***
(0.00451)
 Diabetes–0.125***
(0.00147)
 Arthritis–0.0379***
(0.00170)
 Mental/psychiatric disorder (excl. Alzheimer’s/dementia)–0.0648***
(0.00211)
 Alzheimer’s/dementia0.189***
(0.00352)
 Osteoporosis–0.0672***
(0.00183)
 Broken hip0.301***
(0.0106)
 Parkinson’s disease–0.0562***
(0.00581)
 Emphysema/asthma/chronic obstructive pulmonary disorder0.108***
(0.00179)
 Paralysis in past year–0.840***
(0.00723)
 Lost a limb0.359***
(0.00983)
 Mental retardation1.105***
(0.0125)
 Renal failure–1.873***
(0.0110)
 Obesity–0.227***
(0.00157)
 Age0.147***
(0.00189)
 Age squared–0.00102***
(1.23e-05)
 Female0.254***
(0.00147)
 Race: American Indian0.278***
(0.0117)
 Race: Asian or Pacific Islander1.019***
(0.00638)
 Race: Black0.0724***
(0.00223)
 Race: Don’t know/more than one–0.0127***
(0.00357)
 Ethnicity: Hispanic0.355***
(0.00273)
 Education: Less than high school graduate–0.0693***
(0.00172)
 Education: College graduate–0.0282***
(0.00194)
 Log of income0.00634***
(0.000736)
 Smoker0.287***
(0.00247)
 Reports health to be “excellent”, “very good” or “good”–0.196***
(0.00188)
 Census division: South Atlantic–0.199***
(0.00525)
 Census division: Middle Atlantic–0.116***
(0.00527)
 Census division: East North Central–0.472***
(0.00533)
 Census division: West North Central–0.321***
(0.00571)
 Census division: New England–0.110***
(0.00631)
 Census division: East South Central–0.0382***
(0.00636)
 Census division: West South Central–0.689***
(0.00543)
 Census division: Mountain–0.457***
(0.00530)
 Census division: Pacific–0.448***
(0.00515)
 Constant–4.774***
(0.0727)
 Observations1063

Standard errors in parentheses. Regression is weighted with MCBS survey weights. ***p<0.01, **p<0.05, *p<0.1.

Appendix Table 3:

Regression Output of GLM of Spending as Function of Diagnoses.

2001–20032004–20062007–2009
Hardening of arteries/arteriosclerotic heart disease1943***937.6*1615***
(624.6)(517.6)(619.0)
Hypertension281.9953.9***961.1***
(268.0)(293.3)(258.1)
Myocardial infarction3423*5377**3596*
(1797)(2372)(1897)
Angina/Coronary heart disease1065550.83878**
(1315)(1052)(1721)
Other heart conditions, valve problem887.53093***2813**
(861.0)(990.0)(1125)
Congestive heart failure6219**25284592**
(2475)(1875)(1996)
Heart rhythm problem3436***3356***4045***
(1026)(939.9)(967.0)
Stroke/transient ischemic attack5806***4097**3372**
(2175)(1824)(1495)
Diabetes1352***2118***1159***
(349.2)(349.0)(298.7)
Arthritis1194***726.6**481.6
(306.1)(295.2)(321.2)
Mental/psychiatric disorder (excl. Alzheimer’s/dementia)455.51775***2317***
(573.3)(646.7)(592.9)
Alzheimer’s/dementia680.51774*2267**
(847.7)(956.9)(940.6)
Osteoporosis645.1**1370***1036***
(308.1)(311.5)(313.3)
Broken hip6752*241412,246**
(4090)(2319)(5844)
Parkinson’s disease23037702***2784
(1842)(2868)(1708)
Emphysema/asthma/chronic obstructive pulmonary disorder1158***3248***1898***
(419.9)(538.8)(422.0)
Paralysis in past year344014493009
(2741)(2215)(2255)
Lost a limb19074800*–235.4
(2201)(2760)(1457)
High cholesterol1567562.51046**
(1053)(877.8)(492.2)
Cancer3010***2368***2569***
(734.2)(629.8)(609.3)
Constant1637***2115***2975***
(501.9)(459.6)(304.8)
Observations458645236401

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Published Online: 2016-5-12
Published in Print: 2016-12-1

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