One-Third At Risk

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CONTENTS

Executive Summary

Introduction

Socioeconomic Characteristics

Traditional Medicare vs. HMO Enrollment

Health Care Spending on the Vulnerable

Spending on Those with Physical Problems

Conclusions

Appendix

LIST OF FIGURES AND TABLES

Figure ES-1	Beneficiaries with Health Conditions as a Percentage of Beneficiary Population and as a Percentage of Total Medicare Expenditures, 1997
Figure 1	Percentage of Beneficiaries with Health Conditions, by Type of Condition and Poverty Level, 1997
Figure 2	Percentage of Beneficiaries with Health Conditions, by Type of Condition and Age, 1997
Figure 3	Percentage of Beneficiaries with Health Conditions, by Type of Condition and HMO Status, 1997
Figure 4	Traditional Medicare Beneficiaries with Health Conditions: Percentage in the Top 10 Percent of Spending, 1997
Table ES-1	Vulnerability Status by Health Spending and Beneficiary Characteristics, 1997
Table 1	Vulnerability Status by Socio-Demographic Characteristics
Table 2	Vulnerability Status by Poverty and Income
Table 3	Beneficiaries with Cognitive or Physical Conditions by HMO Status, 1993–97
Table 4	Health Spending per Beneficiary, by Type of Condition and Type of Spending, 1997
Table 5	Health Spending per Beneficiary, by Presence or Absence of Physical Conditions, 1997
Table 6	Health Spending per Beneficiary, by Year of Onset of Physical Condition, 1994–96
Table A-1	Socio-Demographic Characteristics by Study Population
Table A-2	Coefficients for Variables Explaining Medicare Spending

EXECUTIVE SUMMARY

Before contemplating reforms in Medicare, it is crucial to understand the needs of vulnerable groups the program serves so that the important achievement of providing mainstream coverage to these populations is not undermined. While a considerable amount of a given year’s health care expenses is unpredictable—the result of accidents or illnesses that strike without warning—many Medicare beneficiaries have health conditions that make substantial expenditures predictable. Elderly and disabled people have a disproportionate share of chronic and acute conditions. It is to be expected that members of these groups will make decisions about insurance and health care spending that reflect their knowledge of the expenses such conditions are likely to incur. Consequently, these populations are the least attractive customers for the private insurance sector and the ones at whom Medicare reforms and protections should be targeted.

Basic Characteristics of Vulnerable Groups
This report examines two categories of vulnerable Medicare beneficiaries—people with cognitive problems and those with physical ailments. The categories are derived from the Medicare Current Beneficiary Survey (MCBS). In 1966, 33 percent of Medicare beneficiaries suffered from either a cognitive or physical difficulty; and almost 13 percent had both cognitive and physical problems (Table ES-1).

Many of the impairments appear in predictable demographic groups. More than 13 percent of beneficiaries with incomes below the poverty line have both cognitive and physical difficulties; just over 5 percent of those with incomes of more than 400 percent of poverty have both problems. It is unclear whether the health problems are the result of low incomes or vice versa. However, those with higher incomes are more likely to be working and in better health. Age is also associated with a higher incidence of health problems. Nearly 37 percent of beneficiaries older than age 85 have physical and cognitive problems; fewer than 4 percent of beneficiaries between the ages of 65 and 69 have comparable limitations.

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