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United States Government Accountability Office: 
GAO: 

Report to Congressional Requesters: 

December 2013: 

Medicare: 

Continuous Insurance before Enrollment Associated with Better Health 
and Lower Program Spending: 

GAO-14-53: 

GAO Highlights: 

Highlights of GAO-14-53, a report to congressional requesters. 

Why GAO Did This Study: 

Nearly 7 million individuals aged 55 to 64—-more than 18 percent of 
the pre-Medicare population-—lacked health insurance coverage in the 
first half of 2012. Health insurance protects individuals from the 
risk of financial hardship when they need medical care, and uninsured 
individuals may refrain from seeking necessary care because of the 
cost. If they forgo medical care beforehand, these individuals may be 
in worse health and need costlier medical services after enrolling in 
Medicare compared to those with prior insurance. 

GAO was asked to review the effects of having prior health insurance 
coverage on Medicare beneficiaries. This report examines the health 
status, program spending, and use of services of Medicare 
beneficiaries with and without continuous health insurance coverage 
before Medicare enrollment. To examine the effects of beneficiaries’ 
prior insurance coverage, GAO used data from the Health and Retirement 
Study and Medicare claims to conduct two types of multivariate 
analysis. GAO predicted probabilities of beneficiaries’ reporting 
being in good health or better and values for program spending and 
beneficiaries’ use of services. 

In comments on a draft of this report, the Department of Health and 
Human Services highlighted a key finding in GAO’s report that 
beneficiaries with prior insurance used fewer or less costly medical 
services in Medicare compared with those without prior insurance. 

What GAO Found: 

Beneficiaries with continuous health insurance coverage for 
approximately 6 years before enrolling in Medicare were more likely 
than those without prior continuous insurance to report being in good 
health or better during the first 6 years in Medicare. In particular, 
having prior continuous insurance raised the predicted probability 
that a beneficiary reported being in good health or better by nearly 6 
percentage points during the first 6 years in Medicare. 

Beneficiaries with prior continuous insurance had lower total program 
spending during the first year in Medicare compared with those without 
prior continuous insurance. Specifically, during the first year in 
Medicare, beneficiaries with prior continuous insurance had 
approximately $2,300, or 35 percent, less in average predicted total 
spending than those without prior continuous insurance. Similarly, 
beneficiaries with prior continuous insurance had lower institutional 
outpatient spending—for example, spending for services provided in a 
hospital outpatient setting—during the first and second years in 
Medicare compared with those without prior continuous insurance. In 
contrast, physician and other noninstitutional spending—spending for 
services provided by physicians, clinical laboratories, free-standing 
ambulatory surgical centers, and other noninstitutional providers—were 
similar during the early years in Medicare for beneficiaries with and 
without prior continuous insurance. However, during the fourth and 
fifth years in Medicare, beneficiaries with prior continuous insurance 
had physician and other noninstitutional spending that was about 30 
percent higher than beneficiaries without prior continuous insurance. 

Beneficiaries with prior continuous insurance had more physician 
office visits during the first 5 years in Medicare compared with those 
without prior continuous insurance. Specifically, during the first 5 
years in Medicare, the difference in the average predicted number of 
physician office visits between beneficiaries with and without prior 
continuous insurance ranged from 1.3 to 2.5, or 23 to 46 percent. This 
utilization pattern may indicate that, even after Medicare enrollment, 
beneficiaries with prior continuous insurance continued to access 
medical services differently from those without prior continuous 
insurance. The number of institutional outpatient visits was similar 
for beneficiaries with and without prior continuous insurance for the 
first 5 years after Medicare enrollment. 

Taken together, GAO’s results show that, consistent with those of some 
other researchers, beneficiaries with prior continuous insurance used 
fewer or less costly medical services compared with beneficiaries 
without such insurance during the early years in Medicare, because 
they either were in better health or were accustomed to accessing 
medical services differently. This suggests that the extent to which 
individuals enroll in private insurance before age 65 has implications 
for beneficiaries’ health status and Medicare spending. 

View [hyperlink, http://www.gao.gov/products/GAO-14-53]. For more 
information, contact James Cosgrove at (202) 512-7114 or 
cosgrovej@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Beneficiaries with Continuous Insurance before Medicare Were More 
Likely to Report Better Health after Medicare Enrollment than Those 
without Continuous Insurance: 

Beneficiaries with Continuous Insurance before Medicare Had Lower 
Program Spending and More Physician Office Visits after Medicare 
Enrollment than Those without Continuous Insurance: 

Concluding Observations: 

Agency Comments: 

Appendix I: Data and Methods: 

Appendix II: Comments from the Department of Health and Human Services: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Predicted Probability of Beneficiaries with and without Prior 
Continuous Insurance for 6 Years before Medicare Reporting Good Health 
or Better in Medicare: 

Table 2: Predicted Total Medicare Spending for Beneficiaries with and 
without Continuous Private Insurance for 6 Years before Medicare: 

Table 3: Predicted Institutional Outpatient and Physician and Other 
Noninstitutional Medicare Spending for Beneficiaries with and without 
Continuous Private Insurance for 6 Years before Medicare: 

Table 4: Predicted Service Use for Beneficiaries with and without 
Continuous Private Insurance for 6 Years before Medicare: 

Table 5: Multivariate Analysis of the Effect of Prior Continuous 
Insurance on Self-Reported Health Status for Beneficiaries in Their 
First or Second Year of Medicare Enrollment: 

Table 6: Multivariate Analysis of the Effect of Prior Continuous 
Insurance on Total Medicare Spending for Beneficiaries in Their First 
Year of Medicare Enrollment: 

Table 7: Beneficiaries in Study Population for Health Status Analyses 
in Their First or Second Year of Enrollment Compared with All Medicare 
Beneficiaries in Their First or Second Year of Enrollment, 2003-2010: 

Table 8: Beneficiaries in Study Population for Analyses of Spending 
and Use of Services in Their First Year of Enrollment Compared with 
All Medicare Beneficiaries in Their First Year of Enrollment, 2003-
2010: 

Figures: 

Figure 1: Study Populations for Health Status Analyses: 

Figure 2: Study Populations for Analyses of Spending and Use of 
Services: 

Abbreviations: 

CMS: Centers for Medicare & Medicaid Services: 

HRS: Health and Retirement Study: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

December 17, 2013: 

The Honorable Max Baucus: 
Chairman: 
Committee on Finance: 
United States Senate: 

The Honorable Tom Harkin: 
Chairman: 
Committee on Health, Education, Labor, and Pensions: 
United States Senate: 

The Honorable Sheldon Whitehouse: 
United States Senate: 

Nearly 7 million individuals aged 55 to 64, the pre-Medicare 
population, lacked health insurance coverage in the first half of 
2012, accounting for more than 18 percent of this population.[Footnote 
1] The health insurance coverage of pre-Medicare individuals may have 
implications for the Medicare program. Health insurance protects 
individuals against the risk of financial hardship when they need 
medical care, and uninsured pre-Medicare individuals may refrain from 
seeking necessary care because of the cost. As a result, these 
individuals may be in worse health and may require more costly medical 
services after Medicare enrollment compared with those who were 
insured. They also may, out of habit, continue to seek care 
differently. Previous research has produced inconclusive results 
concerning the extent to which, if at all, health insurance coverage 
before Medicare enrollment affects beneficiaries' spending and use of 
services after enrollment.[Footnote 2] 

You asked us to provide information on the effects of Medicare 
beneficiaries' health insurance coverage before enrollment on their 
health status, spending, and use of services after enrollment. 
[Footnote 3] This report compares (1) the health status of Medicare 
beneficiaries with and without continuous health insurance coverage 
before enrollment and (2) the spending and use of services by Medicare 
beneficiaries with and without continuous health insurance coverage 
before enrollment. 

To examine the effects of continuous health insurance coverage before 
Medicare (our independent variable of interest) on beneficiaries' 
health status, spending, and use of services (our dependent variables 
of interest), we used data from the Health and Retirement Study (HRS) 
and Medicare claims. HRS is a longitudinal panel study that surveys a 
representative sample of more than 26,000 Americans aged 50 and older 
every 2 years. From HRS, we obtained information from 1996 through 
2010 on beneficiaries' self-reported health insurance coverage before 
Medicare, self-reported health status in Medicare, and demographic and 
health-related characteristics. From the Medicare data, we obtained 
information from 2001 through 2010 on multiple categories of 
beneficiaries' Medicare spending (total, institutional outpatient, and 
physician and other noninstitutional spending) and services 
(institutional outpatient and physician office visits).[Footnote 4] 

Unlike other studies, we performed our analysis for multiple groups of 
Medicare beneficiaries categorized by their length of Medicare 
enrollment. This approach enabled us to maximize the number of 
beneficiaries in our study groups and to measure the effects of prior 
continuous insurance on health status, spending, and use of services 
at several points in time after Medicare enrollment. About 4,500 HRS 
respondents met our initial criteria that they were in their first, 
second, third, fourth, fifth, or sixth year of Medicare enrollment 
between 2001 and 2010 and provided information about their insurance 
coverage in each of the three consecutive HRS surveys preceding 
Medicare enrollment. Unlike some other studies on this topic that have 
categorized prior insurance based on a single point in time, we 
categorized beneficiaries as having prior continuous insurance only if 
they reported receiving private insurance in the three consecutive HRS 
surveys before Medicare enrollment at age 65--a period spanning 
approximately 6 years.[Footnote 5] We excluded additional respondents 
who were enrolled in Medicare or Medicaid prior to Medicare enrollment 
at age 65 because their enrollment in these programs may have been 
due, at least in part, to poor health, which could bias our results. 
[Footnote 6] We also excluded respondents who had missing or 
incomplete data for important variables. Our final study sample size 
ranged from 3,201 to 1,152, depending on the analysis. 

Our analyses of health status relied on HRS data that were provided 
every other year. Therefore, for these analyses, we defined three 
distinct groups of beneficiaries who were in (1) their first and 
second years of Medicare, (2) their third and fourth years of 
Medicare, and (3) their fifth and sixth years of Medicare from 2001 
through 2010 (see figure 1 in appendix I). We classified beneficiaries 
as being in good health or better if they reported in HRS that they were 
in excellent, very good, or good health.[Footnote 7] We used logistic 
regression analysis to estimate these beneficiaries' self-reported 
health status and predict probabilities of their reporting being in 
good health or better assuming both that they did and that they did 
not have prior continuous insurance. 

Our analyses of spending and use of services used Medicare data that 
were available each year. Therefore, for these analyses, we defined 
five distinct groups of beneficiaries who were in their first, second, 
third, fourth, and fifth years of enrollment between 2001 through 2010 
(see fig. 2 in app. I). We used generalized linear models to estimate 
beneficiaries' spending and use of services and predict values for 
these variables assuming both that they did and that they did not have 
prior continuous insurance. 

We included the following independent variables in all of our 
analyses: prior continuous insurance, demographic characteristics 
(census division, education level, income, marital status, race, and 
sex), potential health risk factors (body mass index and smoking 
status), and ever having had a diagnosis of any of eight health 
conditions (arthritis, cancer, diabetes, heart problems, high blood 
pressure, lung problems, psychological problems, and stroke). For our 
analyses of spending and use of services, we also included a variable 
for the number of months a beneficiary was alive during the year to 
control for partial-year spending and use of services. In addition, 
for our spending analyses, we adjusted spending to calendar year 2011 
constant dollars. Differences in health status, spending, and use of 
services that are discussed in the text of this report are based on 
results that were statistically significant at a 95 percent confidence 
level. The tables display all of our analytical results--whether or 
not the results were statistically significant at conventional 
confidence levels--and indicate the level of statistical significance. 

Our methodology had some important limitations. Because we used 
multiple exclusion criteria to define our study populations, our 
results might not be representative of the entire Medicare population. 
However, we compared certain characteristics of our study populations 
with those of the entire Medicare population and noted only small 
differences. In addition, like other researchers, we were limited in 
our ability to control for instances where individuals' poor health 
led to the loss of insurance rather than the loss of insurance leading 
to poor health. To address this issue, we controlled for potential 
health risk factors and diagnoses of eight health conditions in all of 
our analyses, and we excluded beneficiaries who were enrolled in 
Medicare or Medicaid before age 65 because their enrollment in these 
programs may be due, at least in part, to poor health. Furthermore, 
because HRS does not collect health insurance plan information, we 
were unable to control for variations in health plan benefits and 
coverage options in our analyses. Moreover, although we structured our 
analyses to capture as many beneficiaries as possible, the number of 
beneficiaries in our study populations may not be large enough to find 
significant differences for some variables. We ensured the reliability 
of the HRS and Medicare data used in this report by reviewing related 
documentation, performing appropriate electronic data checks, and 
discussing the data with officials from Acumen, LLC. We found the data 
were sufficiently reliable for the purpose of our analyses. (See 
appendix I for additional details about our scope and methodology.) 

We conducted this performance audit from July 2011 to December 2013 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Among the pre-Medicare population, the primary source of health 
insurance is private coverage. In the first half of 2012, nearly 69 
percent of individuals in this population were privately insured. An 
additional 13 percent of individuals obtained coverage through 
government programs such as Medicaid. However, a significant portion--
more than 18 percent--was uninsured.[Footnote 8] 

Previous research has demonstrated that individuals with health 
insurance coverage tend to be in better health than individuals 
without coverage.[Footnote 9] However, research regarding the extent 
to which having prior health insurance coverage affects spending and 
use of medical services after enrolling in Medicare has produced 
inconsistent results. For example, one group of researchers found that 
having prior insurance was linked to lower spending and lower rates of 
hospitalization after enrolling in Medicare,[Footnote 10] while 
another group of researchers found that having prior insurance had no 
effect on beneficiaries' spending or rates of hospitalization after 
Medicare enrollment.[Footnote 11] This latter group of researchers 
found, however, that beneficiaries without prior insurance were less 
likely to visit physician offices and more likely to visit hospital 
emergency and outpatient departments after enrolling in Medicare, 
which could indicate that beneficiaries without prior insurance 
continued to access the health care system differently after Medicare 
enrollment. 

Subsequent commentary and analysis by both research groups suggests 
that the conflicting results may be primarily attributable to 
different definitions of prior insurance and different analytical 
approaches to control for differences in beneficiaries with and 
without prior insurance.[Footnote 12] The group that found that having 
prior insurance was linked to lower spending used a more rigorous 
definition of prior insurance based on a longitudinal assessment of 
insurance coverage before age 65 rather than a point-in-time 
assessment. This group included beneficiaries who were enrolled in 
Medicare, Medicaid, and other government health programs before age 65 
in its analysis and used a statistical weighting methodology to 
control for the possibility of reverse causality between health status 
and insurance coverage. More specifically, some individuals may have 
experienced declining health before age 65 that led to loss of 
employment, loss of private insurance coverage, and subsequent 
enrollment in government health programs. The group that did not find 
that having prior insurance was linked to lower spending criticized 
the inclusion of these beneficiaries, noting that many individuals 
transition to government health programs before age 65 because of poor 
health, thereby resulting in an overestimate of the effect of having 
prior insurance on their Medicare spending after age 65. These 
researchers also criticized the statistical weighting methodology used 
to control for the possibility that beneficiaries entered these 
programs because of poor health, contending that the data used in the 
weighting methodology were not sufficiently detailed to adequately 
adjust for this possibility. 

Beneficiaries with Continuous Insurance before Medicare Were More 
Likely to Report Better Health after Medicare Enrollment than Those 
without Continuous Insurance: 

Beneficiaries with prior continuous insurance were more likely than 
those without prior continuous insurance to report being in good 
health or better in the 6 years after Medicare enrollment. On average, 
the predicted probability of reporting being in good health or better 
in the first 2 years in Medicare was approximately 84 percent for 
beneficiaries with prior continuous insurance and approximately 79 
percent for beneficiaries without prior continuous insurance. Although 
the predicted probabilities of beneficiaries who reported being in 
good health or better decreased over time for both those with and 
without prior continuous insurance, the percentage point difference 
increased slightly. In total, having prior continuous insurance raised 
the predicted probability that a beneficiary reported being in good 
health or better by nearly 6 percentage points in the first 6 years 
after Medicare enrollment. (See table 1.) 

Table 1: Predicted Probability of Beneficiaries with and without Prior 
Continuous Insurance for 6 Years before Medicare Reporting Good Health 
or Better in Medicare: 

Reporting period: First and second years in Medicare; 
Beneficiaries with prior continuous insurance: 84.2%[A]; 
Beneficiaries without prior continuous insurance: 78.7%[A]; 
Percentage point difference: 5.6%[A]. 

Reporting period: Third and fourth years in Medicare; 
Beneficiaries with prior continuous insurance: 82.9%[A]; 
Beneficiaries without prior continuous insurance: 77.2%[A]; 
Percentage point difference: 5.7%[A]. 

Reporting period: Fifth and sixth years in Medicare; 
Beneficiaries with prior continuous insurance: 81.0%[A]; 
Beneficiaries without prior continuous insurance: 75.1%[A]; 
Percentage point difference: 5.9%[A]. 

Source: GAO analysis of Health and Retirement Study data. 

Notes: The table is a summary of results from three models. The models 
included the following independent variables: prior continuous 
insurance, demographic variables (census division, education level, 
income, marital status, race, and sex), potential health risk factors 
(body mass index and smoking status), and ever having had a diagnosis 
of any of eight health conditions (arthritis, cancer, diabetes, heart 
problems, high blood pressure, lung problems, psychological problems, 
and stroke). The number of beneficiaries in each group ranged from 
3,201 for the first and second years in Medicare to 2,001 for the 
fifth and sixth years in Medicare. 

[A] Effect of prior continuous insurance significant at the .01 level. 

[End of table] 

According to previous research, there are reasons why Medicare 
beneficiaries with prior continuous insurance may be healthier than 
those without prior continuous insurance. Because of financial 
constraints, beneficiaries without prior continuous insurance may have 
difficulty accessing medical services that could help them improve 
their health before they enroll in Medicare. In addition, being 
uninsured before Medicare may have effects on beneficiaries' health 
that remain for some time. For example, if a beneficiary without prior 
continuous insurance is diagnosed with diabetes and has inadequate 
access to care before Medicare, the beneficiary may develop 
complications that increase the risk for adverse health events for 
years to come, even after the diabetes is controlled. 

Beneficiaries with Continuous Insurance before Medicare Had Lower 
Program Spending and More Physician Office Visits after Medicare 
Enrollment than Those without Continuous Insurance: 

There were differences in Medicare spending and use of services 
between beneficiaries with and without prior continuous insurance. In 
particular, compared with beneficiaries without prior continuous 
insurance, beneficiaries with prior continuous insurance had 
significantly lower total spending during the first year in Medicare. 
[Footnote 13] 

Beneficiaries with Prior Continuous Insurance Had Approximately $2,300 
Less in Estimated Total Spending during the First Year in Medicare 
than Those without Prior Continuous Insurance: 

Beneficiaries with prior continuous insurance had lower total program 
spending during the first year in Medicare compared with those without 
prior continuous insurance.[Footnote 14] Specifically, during the 
first year in Medicare, average predicted total spending for 
beneficiaries with and without prior continuous insurance was $4,390 
and $6,733, respectively--a difference of $2,343, or 35 percent. 
Because the difference in total spending was the greatest during the 
first year in Medicare, it is possible that beneficiaries without 
prior continuous insurance had a pent-up demand for medical services 
in anticipation of coverage at age 65. Table 2 shows predicted 
spending, as well as the difference in predicted spending, during the 
first 5 years in Medicare for beneficiaries with and without prior 
continuous insurance. 

Table 2: Predicted Total Medicare Spending for Beneficiaries with and 
without Continuous Private Insurance for 6 Years before Medicare: 

Type of spending: Beneficiaries with prior continuous insurance; 
Average predicted spending by year of Medicare enrollment: 
First year: $4,390; 
Second year: $5,223; 
Third year: $6,129; 
Fourth year: $6,093; 
Fifth year: $6,068. 

Type of spending: Beneficiaries without prior continuous insurance; 
Average predicted spending by year of Medicare enrollment: 
First year: $6,733; 
Second year: $6,316; 
Third year: $7,311; 
Fourth year: $5,227; 
Fifth year: $6,630. 

Type of spending: Difference; 
Average predicted spending by year of Medicare enrollment: 
First year: ($2,343)[A]; 
Second year: ($1,093)[B]; 
Third year: ($1,183); 
Fourth year: $865; 
Fifth year: ($562). 

Source: GAO analysis of Health and Retirement Study (HRS) and Centers 
for Medicare & Medicaid Services (CMS) data. 

Notes: The table is a summary of results from five models and compares 
average predicted spending, by year of Medicare enrollment, for 
beneficiaries who reported having continuous private insurance in the 
6 years before Medicare with that for beneficiaries who reported not 
having continuous private insurance. For example, during the first 
year in Medicare, predicted total spending for beneficiaries with 
prior continuous insurance would be, on average, $2,343 less than 
for beneficiaries without prior continuous insurance. 

The models included the following independent variables: prior 
continuous insurance, demographic variables (census division, 
education level, income, marital status, race, and sex), potential 
health risk factors (body mass index and smoking status), the number 
of months a beneficiary was alive during the year, and ever having had 
a diagnosis of any of eight health conditions (arthritis, cancer, 
diabetes, heart problems, high blood pressure, lung problems, 
psychological problems, and stroke). The number of beneficiaries in 
each group ranged from 1,592 for the first year of enrollment to 1,152 
for the fifth year of enrollment. 

Total spending includes inpatient, institutional outpatient, durable 
medical equipment, skilled nursing facility, home health, hospice, and 
physician and other noninstitutional spending. 

[A] Effect of prior continuous insurance significant at the .01 level. 

[B] Effect of prior continuous insurance significant at the .10 level. 

[End of table] 

Similar to our results for total spending, beneficiaries with prior 
continuous insurance had lower institutional outpatient spending 
during the first and second years in Medicare compared with those 
without prior continuous insurance. Specifically, during the first 
year in Medicare, average predicted institutional outpatient spending 
was $513 (or 32 percent) less for beneficiaries with prior continuous 
insurance (see table 3). During the second year in Medicare, average 
predicted institutional outpatient spending was $609 (or 33 percent) 
less for beneficiaries with prior continuous insurance. 

Table 3: Predicted Institutional Outpatient and Physician and Other 
Noninstitutional Medicare Spending for Beneficiaries with and without 
Continuous Private Insurance for 6 Years before Medicare: 

Type of spending: Institutional outpatient: Beneficiaries with prior 
continuous insurance; 
Average predicted spending by year of Medicare enrollment: 
First year: $1,068; 
Second year: $1,229; 
Third year: $1,354; 
Fourth year: $1,063; 
Fifth year: $1,400. 

Type of spending: Institutional outpatient: Beneficiaries without 
prior continuous insurance; 
Average predicted spending by year of Medicare enrollment: 
First year: $1,580; 
Second year: $1,838; 
Third year: $1,544; 
Fourth year: $1,038; 
Fifth year: $1,628. 

Type of spending: Institutional outpatient: Difference; 
Average predicted spending by year of Medicare enrollment: 
First year: ($513)[A]; 
Second year: ($609)[A]; 
Third year: ($190); 
Fourth year: $26; 
Fifth year: ($229). 

Type of spending: Physician and other noninstitutional[B]: 
Beneficiaries with prior continuous insurance; 
Average predicted spending by year of Medicare enrollment: 
First year: $1,870; 
Second year: $2,161; 
Third year: $2,235; 
Fourth year: $2,522; 
Fifth year: $2,320. 

Type of spending: Physician and other noninstitutional[B]: 
Beneficiaries without prior continuous insurance; 
Average predicted spending by year of Medicare enrollment: 
First year: $2,251; 
Second year: $1,944; 
Third year: $2,071; 
Fourth year: $1,934; 
Fifth year: $1,808. 

Type of spending: Physician and other noninstitutional[B]: Difference; 
Average predicted spending by year of Medicare enrollment: 
First year: ($381)[C]; 
Second year: $217; 
Third year: $163; 
Fourth year: $589[D]; 
Fifth year: $511[D]. 

Source: GAO analysis of Health and Retirement Study (HRS) and Centers 
for Medicare & Medicaid Services (CMS) data. 

Notes: The table is a summary of results from 10 models and compares 
average predicted spending, by year of Medicare enrollment, for 
beneficiaries who reported having continuous private insurance in the 
6 years before Medicare with that for beneficiaries who reported not 
having continuous private insurance. For example, during the first 
year in Medicare, predicted institutional outpatient spending for 
beneficiaries with prior continuous insurance would be, on average, 
$513 less than for beneficiaries without prior continuous insurance. 

The models included the following independent variables: prior 
continuous insurance, demographic variables (census division, 
education level, income, marital status, race, and sex), potential 
health risk factors (body mass index and smoking status), the number 
of months a beneficiary was alive during the year, and ever having had 
a diagnosis of any of eight health conditions (arthritis, cancer, 
diabetes, heart problems, high blood pressure, lung problems, 
psychological problems, and stroke). The number of beneficiaries in 
each group ranged from 1,592 for the first year of enrollment to 1,152 
for the fifth year of enrollment. 

[A] Effect of prior continuous insurance significant at the .01 level. 

[B] Physician and other noninstitutional spending refers to Medicare's 
per beneficiary spending for services provided by noninstitutional 
providers, such as physicians, clinical laboratories, and free-
standing ambulatory surgical centers. 

[C] Effect of prior continuous insurance significant at the .10 level. 

[D] Effect of prior continuous insurance significant at the .05 level. 

[End of table] 

In contrast to our results for total spending and institutional 
outpatient spending, physician and other noninstitutional spending 
were similar during the early years in Medicare for beneficiaries with 
and without prior continuous insurance. However, during the fourth and 
fifth years in Medicare, beneficiaries with prior continuous insurance 
had higher physician and other noninstitutional spending. 
Specifically, during the fourth and fifth years in Medicare, average 
predicted physician and other noninstitutional spending was $589 (or 
30 percent) and $511 (or 28 percent) more, respectively, for 
beneficiaries with prior continuous insurance. 

Beneficiaries with Prior Continuous Insurance Had More Physician 
Office Visits during the First 5 Years in Medicare than Those without 
Prior Continuous Insurance: 

Beneficiaries with prior continuous insurance had more physician 
office visits during the first 5 years in Medicare than those without 
prior continuous insurance. Specifically, during the first 5 years in 
Medicare, the difference in the average predicted number of physician 
office visits between beneficiaries with and without prior continuous 
insurance ranged from 1.3 to 2.5, or 23 to 46 percent (see table 4). 
This utilization pattern may indicate that, even after Medicare 
enrollment, beneficiaries with prior continuous insurance continued to 
access medical services differently compared with those without prior 
continuous insurance. For example, beneficiaries with prior continuous 
insurance may have been more likely to have physician office visits 
before Medicare if their insurance covered these visits. 

Table 4: Predicted Service Use for Beneficiaries with and without 
Continuous Private Insurance for 6 Years before Medicare: 

Type of service: Physician office visit: Beneficiaries with prior 
continuous insurance; 
Average predicted number of services used by year of Medicare 
enrollment: 
First year: 6.3; 
Second year: 6.8; 
Third year: 7.1; 
Fourth year: 7.2; 
Fifth year: 7.8. 

Type of service: Physician office visit: Beneficiaries without prior 
continuous insurance; 
Average predicted number of services used by year of Medicare 
enrollment: 
First year: 4.9; 
Second year: 5.4; 
Third year: 5.8; 
Fourth year: 5.3; 
Fifth year: 5.4. 

Type of service: Physician office visit: Difference; 
Average predicted number of services used by year of Medicare 
enrollment: 
First year: 1.4[A]; 
Second year: 1.5[A]; 
Third year: 1.3[A]; 
Fourth year: 2.0[A]; 
Fifth year: 2.5[A]. 

Type of service: Institutional outpatient visit: Beneficiaries with 
prior continuous insurance; 
Average predicted number of services used by year of Medicare 
enrollment: 
First year: 2.8; 
Second year: 3.1; 
Third year: 3.2; 
Fourth year: 3.1; 
Fifth year: 3.5. 

Type of service: Institutional outpatient visit: Beneficiaries without 
prior continuous insurance; 
Average predicted number of services used by year of Medicare 
enrollment: 
First year: 2.9; 
Second year: 3.1; 
Third year: 3.1; 
Fourth year: 3.0; 
Fifth year: 3.4. 

Type of service: Institutional outpatient visit: Difference; 
Average predicted number of services used by year of Medicare 
enrollment: 
First year: (0.1); 
Second year: (0.1); 
Third year: 0.1; 
Fourth year: 0.2; 
Fifth year: 0.0. 

Source: GAO analysis of Health and Retirement Study (HRS) and Centers 
for Medicare & Medicaid Services (CMS) data. 

Notes: The table is a summary of results from 10 models and compares 
average predicted service use, by year of Medicare enrollment, for 
beneficiaries who reported having continuous private insurance in the 
6 years before Medicare with that for beneficiaries who reported not 
having continuous private insurance. For example, during the first 
year in Medicare, the predicted number of physician office visits for 
beneficiaries with continuous insurance before Medicare would be, on 
average, 1.4 more than that of beneficiaries without continuous 
insurance. All values in the table are rounded to the nearest one-
tenth. 

The models included the following independent variables: prior 
continuous insurance, demographic variables (census division, 
education level, income, marital status, race, and sex), potential 
health risk factors (body mass index and smoking status), the number 
of months a beneficiary was alive during the year, and ever having had 
a diagnosis of any of eight health conditions (arthritis, cancer, 
diabetes, heart problems, high blood pressure, lung problems, 
psychological problems, and stroke). The number of beneficiaries in 
each group ranged from 1,592 for the first year of enrollment to 1,152 
for the fifth year of enrollment. 

[A] Effect of prior continuous insurance significant at the .01 level. 

[End of table] 

According to our analyses, the number of institutional outpatient 
visits was similar for beneficiaries with and without prior continuous 
insurance. However, because we found that beneficiaries without prior 
continuous insurance had higher institutional outpatient spending, it 
is possible that they required more costly outpatient care than 
beneficiaries with prior continuous insurance. 

Concluding Observations: 

Previous research regarding the extent to which health insurance 
coverage prior to Medicare enrollment affects beneficiaries' spending 
and use of services after enrollment has been inconclusive, possibly 
because of different definitions of prior insurance and different 
approaches for dealing with the potential for reverse causality 
between health status and health insurance coverage. Like researchers 
who did not find significant differences in Medicare spending between 
beneficiaries with and without prior insurance coverage, we excluded 
individuals who were enrolled in government health programs prior to 
age 65 from our analysis because of the possibility that they lost 
insurance coverage because of poor health, which could have resulted 
in an overestimate of the effect of having prior insurance on Medicare 
spending after age 65. However, like researchers who did find 
significant differences in Medicare spending between these groups, we 
used a more rigorous definition of prior insurance based on a 
longitudinal assessment of insurance coverage before age 65 rather 
than a single point in time. Using our methodology, we found 
significant differences in Medicare spending between beneficiaries 
with and without prior continuous insurance. 

This study adds to the body of evidence suggesting that beneficiaries 
with prior insurance used fewer or less costly medical services in 
Medicare compared with those without prior insurance, because they 
either were in better health or were accustomed to accessing medical 
services differently. In particular, we found that beneficiaries with 
prior continuous insurance were more likely than those without prior 
continuous insurance to report being in good health or better in the 6 
years after Medicare enrollment. Additionally, we found that 
beneficiaries without prior continuous insurance had higher total and 
institutional outpatient spending but did not have higher spending for 
physician and other noninstitutional services, suggesting that they 
required more intensive medical services or that they were accustomed 
to visiting hospitals more than physician offices. This suggests that 
the extent to which individuals enroll in private insurance before age 
65 has implications for beneficiaries' health status and Medicare 
spending. 

Agency Comments: 

We provided a draft of this report to the Department of Health and 
Human Services for review. In written comments, reproduced in appendix 
II, the department highlighted a key finding in our report that 
beneficiaries with prior insurance used fewer or less costly medical 
services in Medicare compared with those without prior insurance. 

As arranged with your offices, unless you publicly announce the 
contents of this report earlier, we plan no further distribution until 
30 days from the report date. At that time, we will send copies of 
this report to appropriate congressional committees and the 
Administrator of the Centers for Medicare & Medicaid Services (CMS). 
The report also will be available at no charge on GAO's website at 
[hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions regarding this report, please 
contact me at (202) 512-7114 or cosgrovej@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix III. 

Signed by: 

James Cosgrove: 
Director, Health Care: 

[End of section] 

Appendix I: Data and Methods: 

This appendix describes the data and methods we used to address our 
research objectives. We used data from the Health and Retirement Study 
(HRS) and Medicare claims. HRS is a longitudinal panel study that 
surveys a representative sample of more than 26,000 Americans over the 
age of 50 every 2 years.[Footnote 15] We used a subset of HRS data 
from 1996 through 2010 to obtain information on beneficiaries' health 
insurance coverage before Medicare, health status in Medicare, 
demographic characteristics, potential health risk factors, and 
diagnoses of health conditions. Because HRS data are survey data, 
these data were self-reported. We also used data from the Medicare 
Beneficiary Annual Summary Files and the Medicare Denominator Files 
from 2001 through 2010 to obtain information on Medicare spending and 
use of services. We worked with Acumen, LLC, to link beneficiaries' 
HRS data with their Medicare data and to conduct statistical analyses 
of their spending and use of services.[Footnote 16] We assessed the 
reliability of the HRS and Medicare data and determined that the data 
were adequate for our purposes. We conducted our work from July 2011 
to December 2013 in accordance with generally accepted government 
auditing standards. 

Data Sources: 

Health and Retirement Study: 

To determine whether Medicare beneficiaries had continuous health 
insurance coverage before Medicare, we used HRS data to develop a 
composite measure. We categorized beneficiaries as having prior 
continuous insurance if they reported receiving private insurance 
through their employer or their spouse's employer in the three 
consecutive HRS surveys before Medicare enrollment at age 65--a period 
spanning approximately 6 years. To analyze beneficiaries' health 
status in Medicare, we collapsed the HRS self-reported health status 
measure, which uses a scale from 1 (excellent) to 5 (poor), to two 
categories. We classified beneficiaries as being in good health or 
better if they reported being in excellent, very good, or good health. 
We also used HRS data to develop a set of independent variables for 
our analyses. Specifically, we used data on demographic 
characteristics (census division, education level, income, marital 
status, race, and sex), potential health risk factors (body mass index 
and smoking status), and ever having had a diagnosis of any of eight 
health conditions (arthritis, cancer, diabetes, heart problem, high 
blood pressure, lung problem, psychological problem, and stroke). 

Medicare Data: 

To analyze beneficiaries' spending and use of services, we used data 
from the Medicare Beneficiary Annual Summary Files. In particular, we 
obtained data on total, institutional outpatient, institutional 
inpatient, home health, and physician and other noninstitutional 
spending; institutional outpatient and physician office visits; and 
hospital stays.[Footnote 17] We also used enrollment data from the 
Beneficiary Annual Summary Files and Medicare Denominator Files to 
determine which beneficiaries to include in our analyses of spending 
and use of services. 

Study Populations: 

Health Status Analyses: 

Because we used HRS data on beneficiaries' self-reported health status 
that were collected about every 2 years, we defined three groups of 
beneficiaries, drawn from multiple survey years spanning 2001 through 
2010, who were in (1) their first and second years of Medicare, (2) 
their third and fourth years of Medicare, and (3) their fifth and 
sixth years of Medicare (see fig. 1). This approach allowed us to 
measure the effect of prior continuous insurance on self-reported 
health status at three points in time after Medicare enrollment. 

Figure 1: Study Populations for Health Status Analyses: 

[Refer to PDF for image: illustrated chart] 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 1996; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59 and 60. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 1998; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2000; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2002; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Survey year in Medicare period for which HRS data on self-reported 
health status are available: 2002; 
Group for which health status is reported in the 1st or 2nd year of 
full Medicare enrollment: 65 and 66. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2004; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Survey year in Medicare period for which HRS data on self-reported 
health status are available: 2004; 
Group for which health status is reported in the 1st or 2nd year of 
full Medicare enrollment: 65 and 66; 
Group for which health status is reported in the 3rd or 4th year of 
full Medicare enrollment: 67 and 68. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2006; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Survey year in Medicare period for which HRS data on self-reported 
health status are available: 2006; 
Group for which health status is reported in the 1st or 2nd year of 
full Medicare enrollment: 65 and 66; 
Group for which health status is reported in the 3rd or 4th year of 
full Medicare enrollment: 67 and 68; 
Group for which health status is reported in the 5th or 6th year of 
full Medicare enrollment: 69 and 70. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2008; 
Pre-Medicare Observation Period: 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Survey year in Medicare period for which HRS data on self-reported 
health status are available: 2008; 
Group for which health status is reported in the 1st or 2nd year of 
full Medicare enrollment: 65 and 66; 
Group for which health status is reported in the 3rd or 4th year of 
full Medicare enrollment: 67 and 68; 
Group for which health status is reported in the 5th or 6th year of 
full Medicare enrollment: 69 and 70. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2010; 
Pre-Medicare Observation Period: 
Survey year in Medicare period for which HRS data on self-reported 
health status are available: 2010; 
Group for which health status is reported in the 1st or 2nd year of 
full Medicare enrollment: 65 and 66; 
Group for which health status is reported in the 3rd or 4th year of 
full Medicare enrollment: 67 and 68; 
Group for which health status is reported in the 5th or 6th year of 
full Medicare enrollment: 69 and 70. 

Source: GAO. 

[End of figure] 

Analyses of Spending and Use of Services: 

Because we used Medicare data on beneficiaries' program spending and 
use of services that were collected every year, we defined five groups 
of beneficiaries who were in their first, second, third, fourth, and 
fifth years of enrollment from 2001 through 2010 (see fig. 2). This 
approach allowed us to measure the effect of prior continuous 
insurance on spending and use of services for beneficiaries in each of 
the first 5 years of Medicare enrollment. 

Figure 2: Study Populations for Analyses of Spending and Use of 
Services: 

[Refer to PDF for image: illustrated chart] 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 1996; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59 and 60. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 1998; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2000; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2001; 
Pre-Medicare Observation Period: 
Year in Medicare period for which spending and utilization data are 
available: 65; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2002; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Year in Medicare period for which spending and utilization data are 
available: 65, 66; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2003; 
Year in Medicare period for which spending and utilization data are 
available: 65, 66 and 67; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2004; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 59, 60, 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Year in Medicare period for which spending and utilization data are 
available: 65, 66, 67 and 68; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 
4th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 68. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2005; 
Year in Medicare period for which spending and utilization data are 
available: 65, 66, 67, 68 and 69; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 
4th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 68. 
5th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 69. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2006; 
Pre-Medicare Observation Period: 
Age as of January 31 in relevant year: 61 and 62; 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Year in Medicare period for which spending and utilization data are 
available: 65, 66, 67, 68 and 69; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 
4th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 68. 
5th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 69. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2007; 
Year in Medicare period for which spending and utilization data are 
available: 65, 66, 67, 68 and 69; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 
4th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 68. 
5th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 69. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2008; 
Pre-Medicare Observation Period: 
Age as of interview date in last HRS survey before Medicare 
enrollment: 63 and 64. 
Year in Medicare period for which spending and utilization data are 
available: 65, 66, 67, 68 and 69; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 
4th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 68. 
5th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 69. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2009; 
Year in Medicare period for which spending and utilization data are 
available: 65, 66, 67, 68 and 69; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 
4th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 68. 
5th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 69. 

Survey year in pre-Medicare observation period for which Health and 
Retirement Study (HRS) data on insurance coverage and other 
characteristics are available: 2010; 
Year in Medicare period for which spending and utilization data are 
available: 65, 66, 67, 68 and 69; 
1st calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 65. 
2nd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 66. 
3rd calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 67. 
4th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 68. 
5th calendar year of full Medicare enrollment (person has Parts A & B 
for 12 months). A separate multivariate analysis is performed for each 
of these groups: 69. 

Source: GAO. 

[End of figure] 

Exclusion Criteria: 

For all of our analyses, we excluded beneficiaries from our study 
populations because of missing data and design and methodological 
issues. Specifically, we excluded beneficiaries who died before age 
65; beneficiaries who were over age 65 as of January 31, 2001; 
beneficiaries who did not participate in all three HRS surveys in 
their pre-Medicare period; and beneficiaries who did not respond to 
relevant HRS questions about insurance during their pre-Medicare 
period. We excluded beneficiaries who were enrolled in Medicare or 
Medicaid before age 65 because their enrollment in these programs may 
have been due, at least in part, to poor health, which would indicate 
that their health status affected their insurance coverage rather than 
the other way around. We chose to exclude these beneficiaries to avoid 
overestimating the effects of having prior continuous insurance on 
health status, spending, and use of services. In addition, we excluded 
beneficiaries who reported receiving coverage from the Veterans Health 
Administration before age 65 because their Medicare spending and use 
of services might not fully represent their overall use of medical 
services. 

For our analyses of spending and use of services, we applied 
additional exclusion criteria to define our study populations. We 
excluded Medicare Advantage beneficiaries because they did not have 
fee-for-service data that could be linked to HRS data.[Footnote 18] In 
addition, we excluded beneficiaries who were not enrolled in both 
Medicare Parts A and B for all months they were alive during a given 
year because we did not have complete information on their spending 
and use of services. 

After the exclusions, the number of beneficiaries in our three study 
populations for our health status analyses ranged from 3,201 for the 
first group to 2,001 for the third group. The number of beneficiaries 
in our five study populations for our analyses of spending and use of 
services ranged from 1,592 for the first group to 1,152 for the fifth 
group. 

Modeling Health Status: 

To examine the relationship between Medicare beneficiaries' prior 
continuous insurance and their self-reported health status, we used 
logistic regression analysis. In particular, we modeled beneficiaries' 
self-reported health status during three periods after Medicare 
enrollment. We also predicted probabilities of their reporting being 
in good health or better assuming both that they did and that they did 
not have prior continuous insurance. In all of our analyses, we 
included the following independent variables: prior continuous 
insurance, demographic characteristics, potential health risk factors, 
and ever having had a diagnosis of any of eight health conditions. See 
table 5 for an example of results from one of the three models that we 
conducted for our analyses of health status. 

Table 5: Multivariate Analysis of the Effect of Prior Continuous 
Insurance on Self-Reported Health Status for Beneficiaries in Their 
First or Second Year of Medicare Enrollment: 

Variable: Prior insurance coverage; 

Measure of variable: Continuous[A]; 
Coefficient: 0.4590; 
Significance level: 0.0009. 

Measure of variable: Not continuous (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Sex; 

Measure of variable: Male; 
Coefficient: -0.3194; 
Significance level: 0.0049. 

Measure of variable: Female (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Race; 

Measure of variable: White; 
Coefficient: 0.2790; 
Significance level: 0.0532. 

Measure of variable: Nonwhite (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Education level; 

Measure of variable: High school graduate; 
Coefficient: 0.7699; 
Significance level: less than 0.0001. 

Measure of variable:Not a high school graduate (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Marital status; 

Measure of variable: Married; 
Coefficient: -0.2572; 
Significance level: 0.0566. 

Measure of variable: Single (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Smoking status; 

Measure of variable: Smoker; 
Coefficient: -0.8466; 
Significance level: <.0001. 

Measure of variable: Nonsmoker (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Body mass index[C]; 

Measure of variable: Continuous; 
Coefficient: -0.0219; 
Significance level: 0.0403. 

Variable: Diagnosed with diabetes[D]; 

Measure of variable: Yes; 
Coefficient: -1.1175; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with heart problem[D]; 

Measure of variable: Yes; 
Coefficient: -0.8250; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with high blood pressure[D]; 

Measure of variable: Yes; 
Coefficient: -0.3419; 
Significance level: 0.0028. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with stroke[D]; 

Measure of variable: Yes; 
Coefficient: -1.1711; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with arthritis[D]; 

Measure of variable: Yes; 
Coefficient: -0.6312; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with cancer[D]; 

Measure of variable: Yes; 
Coefficient: -0.4766; 
Significance level: 0.0036. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with lung problem[D]; 

Measure of variable: Yes; 
Coefficient: -0.8484; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with psychological problem[D]; 

Measure of variable: Yes; 
Coefficient: -0.6955; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Income quintile; 

Measure of variable: 1st (lowest); 
Coefficient: -1.1602; 
Significance level: less than 0.0001. 

Measure of variable: 2nd; 
Coefficient: Variable: -0.7519; 
Significance level: Variable: less than 0.0001. 

Measure of variable: 3rd; 
Coefficient: Variable: -0.3581; 
Significance level: Variable: 0.0548. 

Measure of variable: 4th; 
Coefficient: Variable: -0.6174; 
Significance level: Variable: 0.0006. 

Measure of variable: 5th (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Census division[E]; 

Measure of variable: New England; 
Coefficient: 0.5489; 
Significance level: 0.0857. 

Measure of variable: Middle Atlantic; 
Coefficient: 0.5301; 
Significance level: 0.0164. 

Measure of variable: East North Central; 
Coefficient: 0.5788; 
Significance level: 0.0035. 

Measure of variable: West North Central; 
Coefficient: 0.5005; 
Significance level: 0.0395. 

Measure of variable: South Atlantic; 
Coefficient: 0.4725; 
Significance level: 0.0095. 

Measure of variable: East South Central; 
Coefficient: 0.3128; 
Significance level: 0.2091. 

Measure of variable: West South Central; 
Coefficient: -0.0258; 
Significance level: 0.9021. 

Measure of variable: Mountain; 
Coefficient: 0.2602; 
Significance level: 0.3410. 

Measure of variable: Pacific (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Measure of variable: Intercept; 
Coefficient: 2.9111; 
Significance level: less than 0.0001. 

Number of observations: 
Coefficient: 3,201. 

Source: GAO analysis of Health and Retirement Study (HRS) data. 

Notes: We used logistic regression to examine the effect of having 
prior continuous insurance on beneficiaries' self-reported health 
status during their first or second year of Medicare enrollment. The 
model also controlled for other variables that could affect 
beneficiaries' health status. Data for all of the variables were from 
HRS. The following variables were measured as of the last HRS survey 
prior to Medicare enrollment: marital status, smoking status, body 
mass index, health conditions, income quintile, and census division. 

[A] We defined prior continuous insurance coverage as self-reported 
continuous private health insurance coverage during approximately 6 
years before Medicare enrollment. 

[B] Not available because the method calculates coefficients for the 
included groups relative to the reference group. 

[C] Body mass index is a measure of body fat based on height and 
weight. 

[D] Respondents reported whether or not a physician ever told the 
respondent that he or she had a particular health condition. 

[E] Census divisions are groupings of states that subdivide the United 
States. 

[End of table] 

Modeling Medicare Spending and Use of Services: 

To examine the relationship between Medicare beneficiaries' prior 
continuous insurance and their spending and use of services, we used 
generalized linear models because our spending and service variables 
had skewed distributions and a high proportion of zero values. 
[Footnote 19] For example, for beneficiaries in their first year of 
Medicare enrollment, 30 percent of beneficiaries in our study 
population had no institutional outpatient visits and therefore no 
institutional outpatient spending. We modeled total, institutional 
outpatient, and physician and other noninstitutional spending and 
institutional outpatient and physician office visits for beneficiaries 
in each of the first 5 years of Medicare enrollment.[Footnote 20] We 
predicted values for these variables assuming both that beneficiaries 
did and that beneficiaries did not have prior continuous insurance. In 
all of our analyses, we included the following independent variables: 
prior continuous insurance, demographic characteristics, potential 
health risk factors, ever having had a diagnosis of any of eight 
health conditions, and the number of months a beneficiary was alive 
during the year. For our spending analyses, we used the price index 
from the Personal Health Care Expenditure component of the CMS 
National Health Expenditure Accounts to express all spending in 2011 
dollars. This approach adjusted for inflation by removing the effects 
of health care price level changes between 2001 and 2010. See table 6 
for an example of results from 1 of the 25 models that we ran for 
our analyses of spending and use of services. 

Table 6: Multivariate Analysis of the Effect of Prior Continuous 
Insurance on Total Medicare Spending for Beneficiaries in Their First 
Year of Medicare Enrollment: 

Variable: Prior insurance coverage; 

Measure of variable: Continuous[A]; 
Coefficient: -0.4277; 
Significance level: 0.0002. 

Measure of variable: Not continuous (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Sex; 

Measure of variable: Male; 
Coefficient: 0.0147; 
Significance level: 0.8542. 

Measure of variable: Female (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Race; 

Measure of variable: White; 
Coefficient: 0.0317; 
Significance level: 0.7934. 

Measure of variable: Nonwhite (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Education level; 

Measure of variable: High school graduate; 
Coefficient: 0.2478; 
Significance level: 0.0401. 

Measure of variable:Not a high school graduate (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Marital status; 

Measure of variable: Married; 
Coefficient: -0.1107; 
Significance level: 0.2413. 

Measure of variable: Single (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Smoking status; 

Measure of variable: Smoker; 
Coefficient: 0.1030; 
Significance level: 0.3461. 

Measure of variable: Nonsmoker (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Body mass index[C]; 
Measure of variable: Continuous; 
Coefficient: 0.0118; 
Significance level: 0.1414. 

Variable: Diagnosed with diabetes[D]; 

Measure of variable: Yes; 
Coefficient: 0.6338; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with heart problem[D]; 

Measure of variable: Yes; 
Coefficient: 0.3159; 
Significance level: 0.0044. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with high blood pressure[D]; 

Measure of variable: Yes; 
Coefficient: 0.0175; 
Significance level: 0.8278. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with stroke[D]; 

Measure of variable: Yes; 
Coefficient: -0.3952; 
Significance level: 0.1157. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with arthritis[D]; 

Measure of variable: Yes; 
Coefficient: 0.4153; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with cancer[D]; 

Measure of variable: Yes; 
Coefficient: 0.3979; 
Significance level: 0.0011. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with lung problem[D]; 

Measure of variable: Yes; 
Coefficient: 0.6581; 
Significance level: less than 0.0001. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Diagnosed with psychological problem[D]; 

Measure of variable: Yes; 
Coefficient: 0.2633; 
Significance level: 0.0351. 

Measure of variable: No (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Income quintile; 
Measure of variable: 1st (lowest); 
Coefficient: -0.1330; 
Significance level: 0.3566. 

Measure of variable: 2nd; 
Coefficient: -0.1737; 
Significance level: 0.1727. 

Measure of variable: 3rd; 
Coefficient: -0.0723; 
Significance level: 0.5436. 

Measure of variable: 4th; 
Coefficient: -0.1775; 
Significance level: 0.1296. 

Measure of variable: 5th (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Census division[E]; 

Measure of variable: New England; 
Coefficient: 0.0744; 
Significance level: 0.7462. 

Measure of variable: Middle Atlantic; 
Coefficient: 0.0215; 
Significance level: 0.9013. 

Measure of variable: East North Central; 
Coefficient: -0.2209; 
Significance level: 0.1467. 

Measure of variable: West North Central; 
Coefficient: -0.1201; 
Significance level: 0.4881. 

Measure of variable: South Atlantic; 
Coefficient: 0.1686; 
Significance level: 0.2438. 

Measure of variable: East South Central; 
Coefficient: -0.1622; 
Significance level: 0.3953. 

Measure of variable: West South Central; 
Coefficient: -0.4300; 
Significance level: 0.0147. 

Measure of variable: Mountain; 
Coefficient: -0.3703; 
Significance level: 0.1232. 

Measure of variable: Pacific (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Variable: Number of months the beneficiary was alive during the year; 

Measure of variable: 1; 
Coefficient: 0.6810; 
Significance level: 0.6240. 

Measure of variable: 2; 
Coefficient: 0.3342; 
Significance level: 0.8101. 

Measure of variable: 3; 
Coefficient: 2.6074; 
Significance level: 0.0621. 

Measure of variable: 4; 
Coefficient: 0.3284; 
Significance level: 0.8152. 

Measure of variable: 5; 
Coefficient: 2.1419; 
Significance level: 0.0301. 

Measure of variable: 6; 
Coefficient: n/a[F]; 
Significance level: n/a[F]. 

Measure of variable: 7; 
Coefficient: n/a[F]; 
Significance level: n/a[F]. 

Measure of variable: 8; 
Coefficient: 0.9526; 
Significance level: 0.4951. 

Measure of variable: 9; 
Coefficient: n/a[F]; 
Significance level: n/a[F]. 

Measure of variable: 10; 
Coefficient: -1.0094; 
Significance level: 0.4669. 

Measure of variable: 11; 
Coefficient: 2.0772; 
Significance level: 0.0367. 

Measure of variable: 12 (reference group); 
Coefficient: n/a[B]; 
Significance level: n/a[B]. 

Measure of variable: Intercept; 
Coefficient: 7.8474; 
Significance level: less than 0.0001. 

Number of observations: 
Coefficient: 1,592. 

[End of table] 

Source: GAO analysis of Health and Retirement Study (HRS) and Centers 
for Medicare & Medicaid Services (CMS) data. 

Notes: We used a generalized linear model to examine the effect of 
having prior continuous insurance on total Medicare spending for 
beneficiaries in their first year of Medicare enrollment. The model 
also controlled for other variables that could affect beneficiaries' 
Medicare spending. Data for all of the independent variables other 
than the number of months the beneficiary was alive during the year 
were from HRS. Data for the number of months the beneficiary was alive 
during the year were from Medicare claims. The following variables 
were measured as of the last HRS survey prior to Medicare enrollment: 
marital status, smoking status, body mass index, health conditions, 
income quintile, and census division. 

[A] We defined prior continuous insurance coverage as self-reported 
continuous private health insurance coverage during approximately 6 
years before Medicare enrollment. 

[B] Not available because the method calculates coefficients for the 
included groups relative to the reference group. 

[C] Body mass index is a measure of body fat based on height and 
weight. 

[D] Respondents reported whether or not a physician ever told the 
respondent that he or she had a particular health condition. 

[E] Census divisions are groupings of states that subdivide the United 
States. 

[F] Not available because there were no beneficiaries alive for the 
corresponding number of months. 

[End of table] 

Data Reliability: 

Comparison with the Entire Medicare Population: 

Because we used multiple exclusion criteria to define our study 
populations, our results might not be representative of the entire 
Medicare population. To compare our study populations with the entire 
Medicare population, we examined certain characteristics of these 
populations--gender, race, and census division (see tables 7 and 
8).[Footnote 21] We selected these characteristics because data on 
these characteristics were available in each of the data sources that 
we used. Because we only had access to Medicare Denominator File data 
for 2003 through 2010, we compared characteristics for beneficiaries 
in their first or second year of Medicare enrollment from 2003 through 
2010. On the basis of this analysis, we determined that our study 
populations and the entire Medicare population were comparable. 
However, we noted small differences between the populations. For 
example, compared with the entire Medicare population, our study 
populations included slightly higher percentages of females. 

Table 7: Beneficiaries in Study Population for Health Status Analyses 
in Their First or Second Year of Enrollment Compared with All Medicare 
Beneficiaries in Their First or Second Year of Enrollment, 2003-2010: 

Characteristic: Gender: Male; 
Study population: 41.4%; 
All Medicare beneficiaries: 46.8%. 

Characteristic: Gender: Female; 
Study population: 58.6%; 
All Medicare beneficiaries: 53.2%. 

Characteristic: Race: White; 
Study population: 84.3%; 
All Medicare beneficiaries: 85.3%. 

Characteristic: Race: Nonwhite; 
Study population: 15.7%; 
All Medicare beneficiaries: 14.7%. 

Characteristic: Census division: New England; 
Study population: 4.4%; 
All Medicare beneficiaries: 4.9%. 

Characteristic: Census division: Middle Atlantic; 
Study population: 10.9%; 
All Medicare beneficiaries: 13.6%. 

Characteristic: Census division: East North Central; 
Study population: 16.7%; 
All Medicare beneficiaries: 15.8%. 

Characteristic: Census division: West North Central; 
Study population: 9.1%; 
All Medicare beneficiaries: 7.0%. 

Characteristic: Census division: South Atlantic; 
Study population: 24.9%; 
All Medicare beneficiaries: 20.3%. 

Characteristic: Census division: East South Central; 
Study population: 6.7%; 
All Medicare beneficiaries: 6.2%. 

Characteristic: Census division: West South Central; 
Study population: 9.5%; 
All Medicare beneficiaries: 10.6%. 

Characteristic: Census division: Mountain; 
Study population: 5.7%; 
All Medicare beneficiaries: 6.9%. 

Characteristic: Census division: Pacific; 
Study population: 12.2%; 
All Medicare beneficiaries: 14.8%. 

Source: GAO analysis of Health and Retirement Study (HRS) and 
Centers for Medicare & Medicaid Services (CMS) data. 

[End of table] 

Table 8: Beneficiaries in Study Population for Analyses of Spending 
and Use of Services in Their First Year of Enrollment Compared with 
All Medicare Beneficiaries in Their First Year of Enrollment, 2003-
2010: 

Characteristic: Gender: Male; 
Study population: 40.6%; 
All Medicare beneficiaries: 45.4%. 

Characteristic: Gender: Female; 
Study population: 59.4%; 
All Medicare beneficiaries: 54.6%. 

Characteristic: Race: White; 
Study population: 85.5%; 
All Medicare beneficiaries: 87.5%. 

Characteristic: Race: Nonwhite; 
Study population: 14.5%; 
All Medicare beneficiaries: 12.5%. 

Characteristic: Census division: New England; 
Study population: 3.7%; 
All Medicare beneficiaries: 4.8%. 

Characteristic: Census division: Middle Atlantic; 
Study population: 9.3%; 
All Medicare beneficiaries: 11.5%. 

Characteristic: Census division: East North Central; 
Study population: 17.4%; 
All Medicare beneficiaries: 17.3%. 

Characteristic: Census division: West North Central; 
Study population: 9.6%; 
All Medicare beneficiaries: 7.3%. 

Characteristic: Census division: South Atlantic; 
Study population: 27.0%; 
All Medicare beneficiaries: 22.1%. 

Characteristic: Census division: East South Central; 
Study population: 7.3%; 
All Medicare beneficiaries: 7.0%. 

Characteristic: Census division: West South Central; 
Study population: 11.1%; 
All Medicare beneficiaries: 11.9%. 

Characteristic: Census division: Mountain; 
Study population: 4.4%; 
All Medicare beneficiaries: 6.5%. 

Characteristic: Census division: Pacific; 
Study population: 10.3%; 
All Medicare beneficiaries: 11.6%. 

Source: GAO analysis of Centers for Medicare & Medicaid Services 
(CMS) data. 

[End of table] 

Supplementary Analyses: 

We excluded Medicare beneficiaries who were enrolled in Medicaid 
before age 65 from our primary analyses because their enrollment in 
this program may have been due, at least in part, to poor health. To 
determine the effect, if any, of removing these beneficiaries from our 
analyses, we conducted supplementary analyses of Medicare spending and 
use of services that included these beneficiaries. Results for most of 
the dependent variables (e.g., total spending, physician and other 
noninstitutional spending, physician office visits, and institutional 
outpatient visits) were similar to our original results. However, 
beneficiaries with prior continuous insurance only had lower 
institutional outpatient spending during the first year in Medicare, 
rather than during the first and second years in Medicare, when we 
included these beneficiaries. 

[End of section] 

Appendix II: Comments from the Department of Health and Human Services: 

Department of Health & Human Services: 
Office of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

James Cosgrove: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street NW: 
Washington, DC 20548: 

Dear Mr. Cosgrove: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) report entitled, "Medicare: Continuous Insurance before 
Enrollment Associated with Better Health and Lower Program Spending" 
(GAO-14-53). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Medicare: Continuous Insurance Before Enrollment Associated With 
Better Health And Lower Program Spending" (GA0-14-53): 

The Department appreciates the opportunity to review and comment on 
this draft report. 

GAO reviewed the effects of having prior health insurance coverage on 
Medicare beneficiaries, the health status spending, and use of 
services of Medicare beneficiaries with and without continuous health 
insurance coverage before Medicare enrollment. GAO's findings suggest 
that beneficiaries with prior insurance used fewer or less costly 
medical services in Medicare compared with those without prior 
insurance. 

HHS believes a focus on prevention will not only improve the health of 
Americans, but also help to reduce health care costs and improve 
quality of care. The Affordable Care Act works to address these 
factors. Prevention and access to care will strengthen Americans' 
health during their lives, including when they are eligible for 
Medicare. 

For additional information on building healthier communities and 
investing in prevention, go to the following link; [hyperlink, 
http://www.hhs.gov/healthcare/facts/factsheets/2011/09/arevention0209201
1.html]. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

James Cosgrove, (202) 512-7114 or cosgrovej@gao.gov: 

Staff Acknowledgments: 

In addition to the contact listed above, Christine Brudevold, 
Assistant Director; George Bogart; David Grossman; Elizabeth T. 
Morrison; Aubrey Naffis; and Eric Wedum made key contributions to this 
report. 

[End of section] 

Footnotes: 

[1] Agency for Healthcare Research and Quality, Table 1: Health 
Insurance Coverage of the Civilian Noninstitutionalized Population: 
Percent by Type of Coverage and Selected Population Characteristics, 
United States, First Half of 2012, accessed July 12, 2013, [hyperlink, 
http://meps.ahrq.gov/mepsweb/data_stats/summ_tables/hc/hlth_insr/2012/t1
_a12.pdf]. 

[2] See, for example, Sandra L. Decker et al., "Health Service Use 
among the Previously Uninsured: Is Subsidized Health Insurance 
Enough?" Health Economics (October 2012); J. Michael McWilliams et al., 
"Medicare Spending for Previously Uninsured Adults," Annals of 
Internal Medicine, vol. 151, no. 11 (December 2009). 

[3] For this report, we use "spending" to refer to Medicare program 
spending, not beneficiary spending. 

[4] We worked with Acumen, LLC, to link beneficiaries' HRS data with 
their Medicare data and to conduct statistical analyses of their 
spending and use of services based on programming specifications 
provided by GAO. HRS, which is administered by the University of 
Michigan with support from the National Institute on Aging and the 
Social Security Administration, partners with Acumen to link 
Medicare beneficiaries' HRS data to their Medicare data and to 
provide analytical support for these linked data. Total spending 
refers to Medicare's spending per beneficiary for all covered 
services: durable medical equipment, home health, hospice, inpatient, 
institutional outpatient, physician and other noninstitutional, and 
skilled nursing facility. Institutional outpatient spending refers to 
Medicare's spending per beneficiary for outpatient services provided 
by institutional providers, such as hospital outpatient departments, 
rural health centers, renal dialysis facilities, and outpatient 
rehabilitation facilities. Physician and other noninstitutional 
spending refers to Medicare's spending per beneficiary for services 
provided by certain noninstitutional providers, such as physicians, 
clinical laboratories, and free-standing ambulatory surgical centers. 
Institutional outpatient visits refer to services provided by 
institutional providers on an outpatient basis. Physician office 
visits refer to services provided by noninstitutional providers, such 
as physicians. We also examined home health and institutional 
inpatient spending and hospital stays, but the number of beneficiaries 
with data for these categories was too low to provide meaningful 
results. 

[5] Approximately 80 percent of the beneficiaries in our study 
populations were categorized as having prior continuous insurance. 

[6] Researchers have noted that because declines in health may lead to 
changes in employment and health insurance status, there is a strong 
possibility of a reverse relationship between health and health 
insurance status. See Decker et al., "Health Service Use among the 
Previously Uninsured," 1155-1168. 

[7] We chose to use the self-reported health status measure alone for 
its clarity of meaning and ease of interpretation. Some researchers 
have noted that beneficiaries without prior insurance have a higher 
rate of mortality than those with prior insurance--and that therefore 
mortality should be included in measures of health status. See Daniel 
Polsky et al., "Response to McWilliams Commentary: 'Assessing the 
Health Effects of Medicare Coverage for Previously Uninsured Adults: A 
Matter of Life and Death?'" Health Services Research, vol. 45, no. 5 
(October 2010). Other researchers have noted that combining the HRS self-
reported health status measure with mortality may produce misleading 
results. See J. Michal McWilliams et al., "Commentary: Assessing the 
Health Effects of Medicare Coverage for Previously Uninsured Adults: A 
Matter of Life and Death?" Health Services Research, vol. 45, no. 5 
(October 2010). We checked our sample to see if mortality was associated 
with not having prior continuous insurance and determined that there 
was not a consistent pattern and that inclusion of mortality in our 
health status analyses was not warranted. 

[8] Agency for Healthcare Research and Quality, Table 1: Health 
Insurance Coverage of the Civilian Noninstitutionalized Population: 
Percent by Type of Coverage and Selected Population Characteristics, 
United States, First Half of 2012. 

[9] See Institute of Medicine, America's Uninsured Crisis: 
Consequences for Health and Health Care (Washington, D.C.: 2009). 

[10] See McWilliams et al., "Medicare Spending for Previously 
Uninsured Adults," 757-766. The researchers found that adjusted annual 
total Medicare spending was $1,023 higher for beneficiaries without 
prior insurance ($5,796 vs. $4,773). Additionally, among relevant 
clinical subgroups, beneficiaries without prior insurance had higher 
adjusted annual hospitalization rates for complications related to 
cardiovascular disease or diabetes (9.1 percent vs. 6.4 percent) and 
for joint replacements (2.5 percent vs. 1.3 percent). 

[11] See Decker et al., "Health Service Use among the Previously 
Uninsured," 1155-1168. Although the researchers did not find 
statistically significant differences in Medicare expenditures or in 
the number of hospitalizations for beneficiaries with and without 
prior insurance, they found that beneficiaries without prior insurance 
had 16 percent fewer physician offices visits but 18 percent and 43 
percent more hospital emergency room visits and outpatient department 
visits, respectively. 

[12] See Daniel Polsky and Sandra L. Decker, "Would Insuring Near-
Elderly Persons Reduce Medicare Spending in Patients Aged 65 Years or 
Older?" Annals of Internal Medicine, vol. 152, no. 7 (April 2010) and 
J. Michael McWilliams et al., "In Response: Would Insuring Near-
Elderly Persons Reduce Medicare Spending in Patients Aged 65 Years or 
Older?" Annals of Internal Medicine, vol. 152, no. 7 (April 2010). 

[13] Differences in health status, spending, and use of services that 
are discussed in the text of this report are based on results that 
were statistically significant at a 95 percent confidence level. The 
tables display all of our analytical results--whether or not the 
results were statistically significant at conventional confidence 
levels--and indicate the level of statistical significance. 

[14] Total spending included inpatient, institutional outpatient, 
durable medical equipment, skilled nursing facility, home health, 
hospice, and physician and other noninstitutional spending. 

[15] HRS is administered by the University of Michigan with support 
from the National Institute on Aging and the Social Security 
Administration. The RAND Center for the Study of Aging prepares a 
publicly available subset of HRS data for use by researchers. 

[16] HRS partners with Acumen, LLC, to link Medicare beneficiaries' 
HRS data to their Medicare data and to provide analytical support for 
these linked data. Precautions were taken to ensure compliance with 
applicable confidentiality agreements with HRS. 

[17] Total spending refers to Medicare's spending per beneficiary for 
all covered services: durable medical equipment, home health, hospice, 
inpatient, institutional outpatient, physician and other 
noninstitutional, and skilled nursing facility. Institutional 
outpatient spending refers to Medicare's spending per beneficiary for 
outpatient services provided by institutional providers, such as 
hospital outpatient departments, rural health centers, renal dialysis 
facilities, and outpatient rehabilitation facilities. Physician and 
other noninstitutional spending refers to Medicare's spending per 
beneficiary for services provided by certain noninstitutional 
providers, such as physicians, independent clinical laboratories, and 
free-standing ambulatory surgical centers. Institutional outpatient 
visits refer to services provided by institutional providers on an 
outpatient basis. Physician office visits refer to services provided 
by noninstitutional providers, such as physicians. 

[18] About three out of four beneficiaries are enrolled in Medicare's 
traditional fee-for-service program, and the rest are enrolled in 
private health plans under the Medicare Advantage program. Medicare 
fee-for-service consists of Medicare Part A, which covers hospital and 
other inpatient services, and Medicare Part B, which is optional 
insurance and covers physician, outpatient hospital, home health care, 
and certain other services. 

[19] We used a generalized linear model with a log link function with 
a gamma distribution to model spending and a log link function with a 
negative binomial distribution to model service use. 

[20] We also modeled beneficiaries' home health and institutional 
inpatient spending and hospital stays, but the number of beneficiaries 
with data for these categories was too low to provide meaningful 
results. 

[21] Because we could not determine which beneficiaries in the entire 
Medicare population were enrolled in Medicaid or the Veterans Health 
Administration before age 65, we compared the entire Medicare 
population to our study populations before we excluded these 
individuals. 

[End of section] 

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