Review States, people who reach age 65

Review
Report 1

Paper: David Card Carlos Dobkin &
Maestas, N. The Impact of Nearly Universal Insurance Coverage on Health Care
Utilization: Evidence from Medicare, American Economic Review, 2008, 98,
2242?2258?

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            Card
and Maestas (2008) adopt a regression-discontinuity design (RDD) to analyze the
causal impact of insurance coverage on health care utilization. In the United
States, people who reach age 65 become eligible for Medicare. Assuming that all
other factors (other than insurance coverage) that might affect health care utilization
are continuous at the cutoff age of 65, individuals just below age 65 will be
similar to individuals just above the cutoff. By comparing the outcomes among
both groups of individuals, the RDD can be used to elicit the impact of
insurance on the access to health care and utilization.

            This
paper extends existing literature and makes two main contributions. Firstly, it
analyzes a larger variety of outcomes, such as self-reported access to health care,
the number of doctor visits and the number of hospital admissions for different
medical conditions. This allows us to analyze the impact of insurance on
different health care services. Secondly, the paper delves deeper on the
different effects of insurance on various subgroups of the population, such as
minority groups and the less-educated. This allows us to examine whether
Medicare eligibility increases or lowers disparities in the usage of different
types of health care services.

            There
are 3 main findings of the paper. Firstly, under the first stage regression, Medicare
eligibility (i.e., reaching age 65) increases the probability of any insurance
coverage, raises the rate of dual insurance coverage and lowers managed care
rates. Across subgroups, Medicare eligibility lowers the disparities in
insurance coverage between the more educated whites and less educated
minorities. However, it increases the disparities in dual coverage.

            Secondly,
under the reduced form regression, Card and Maestas (2008) found that

Medicare eligibility increases the usage
of medical care services. It was associated with a reduction in cost-related
access to care problems and an increase in routine doctor visits and hospital
admission rates. These changes differ across various subgroups of the
population. Both access to care and low-cost medical services such as routine
doctor visits increase more for groups that previously lacked insurance
coverage. For higher-cost services such as hospital admissions, the increases
in usage are larger among groups that are more likely to have both Medicare and
supplementary insurance coverage after age 65.

            The
third finding consolidates both the first stage and reduced form regressions to
analyze the impact of insurance coverage on access to care and medical care
utilization. Interestingly, the results showed no relationship between
insurance coverage and hospital admissions. However, insurance coverage was
positively related to access to care and routine doctor visits. Increases in
insurance coverage also reduced intergroup disparity in both access to care and
the likelihood of a regular doctor visit.

            This
paper has several strengths and limitations. One of the strengths is that Card
and Maestas (2008) tested the validity of the regression-discontinuity design. The
key identification assumption of the approach is that all other factors (other
than insurance coverage) that might affect health care utilization are
continuous at the cutoff age of 65. This assumption is violated if there is a
sharp increase in retirement at age 65. If non-workers have more time to see
doctors, the jump in health care utilization at the cutoff age of 65 can be
attributed to this increase in retirement rather than the increase in insurance
coverage. Card and Maestas (2008) found that there was no discontinuity in
employment at age 65, lending support to their RDD approach.

            One
limitation of this paper is that the data collected may not be a good measure
of health care usage. Two key measures of health care utilization were
collected from two survey questions: “Did you have at least 1 doctor visit/hospital
stay in the past year?”. These questions capture less information on the
frequency of health care usage as compared to data such as the number of doctor visits or hospital
stays in the past year. In addition, since the outcome variables are binary
variables, there is less variation in the outcome variables as compared to
continuous variables like the number
of doctor visits. Nonetheless, it is noteworthy that Card and Maestas (2008)
supplemented the data with hospital discharge records that included the number
and characteristics of hospital admissions.

            Despite
this limitation, the research findings can be used to inform policymaking. One
policy implication is that the US government can improve health care access for
minority groups and less educated groups. This paper found that groups that
were uninsured before age 65, such as the less educated minorities and
Hispanics, experienced larger increases in access to care and utilization of
low-cost medical services such as doctor visits. This suggests that the
uninsured tend to be the most vulnerable as they are likely to come from
disadvantaged backgrounds and have low-income. Their lack of insurance further
reduces their access to routine and preventive care, which will negatively
impact their health in the long run. It is important to improve their access to
health care at an early age as an individual’s initial health affects his
future health. In my opinion, the government can extend public insurance or subsidies
to minority groups starting from a young age, especially for routine and preventive
care, so that their health outcomes when they are young can be improved and
this in turn may improve their health when they enter old age.

            Another
important finding is that insurance coverage can reduce intergroup disparities in
access to care and the likelihood of a regular doctor visit. This suggests that
public insurance can be used as a policy tool to lower disparities in both the
access and utilization of health care However, narrowing the gap in health care
may not necessarily lower the disparities in health itself. This is because
health is not just determined by health care, but is also influenced by other
factors such as genetics, nutrition, neighborhoods and education. Health
disparities across socioeconomic and ethnic groups begin from birth and can
widen through life. For instance, lower-income parents tend to have poorer
health and their children may have poorer health outcomes at birth due to
genetic transmission. These children may also lack access to nutritious diet,
reside in dirtier neighborhoods and achieve lower education levels, worsening
their health and increasing health disparities between low-income and
high-income individuals. This suggests that even though health insurance
influences health care and health care affects health, policymakers need to
address these other factors that widen health disparities. As such, to reduce
disparities in health, it is important for policymakers to look beyond health
policies and to also address other domains such as education and neighborhoods.

            The
research findings can also be applied to Singapore. To reduce inequity,
Medifund was established to ensure Singaporeans who face financial difficulties
with their medical bills are not denied access to care. However, the stringent
conditions to qualify for Medifund mean that only the most vulnerable patients who
have exhausted their other financial resources gain access to this assistance. Other
vulnerable patients fall through the cracks of this policy and are left to
struggle to foot their medical bills. The paper showed that insurance coverage
is positively related to access to care and routine doctor visits. Consequently,
relaxing the eligibility conditions for Medifund and extending it to more
low-income individuals will likely improve their access to health care and
increase their usage of routine and preventive care. Increasing access to
health care does not just improve their health outcomes but also impacts other
domains of their lives. For instance, individuals with better health have the
ability and incentive to invest more in human capital, and are likely to earn
higher future incomes.

            In
conclusion, the US’s nearly universal insurance coverage has reduced
disparities in insurance coverage across subgroups and increased health care
utilization. Nonetheless, the relationship between health care utilization and
health outcomes is at best imperfect since health outcomes are also shaped by
other factors such as genes and diet. Since policymakers are ultimately
concerned about the health of individuals, further research can be done to
analyze the impact of insurance on both short-term and long-term health
outcomes.