This report describes the views and experiences of 35 Medicare beneficiaries under the new drug benefit in advance of the 2007 open enrollment period. The report finds that drug plan enrollees generally say that they are satisfied with their drug coverage and have not encountered major difficulties using their plan. At the same time, many of them don’t fully understand how their plan works even after almost a year of experience with this new benefit.

The report is the third from a year-long series of one-on-one structured interviews with a diverse group of Medicare beneficiaries in four cities: Baltimore, Miami, Sacramento, and Lincoln, Nebraska. The Kaiser Family Foundation commissioned Lake Research Partners and American Viewpoint to conduct these interviews.

The first report, “Profiles of Medicare Beneficiaries With Medicaid Drug Coverage Prior to the Medicare Drug Benefit,” profiled four people who are dually eligible for Medicare and Medicaid to provide greater insights into their circumstances as the new Medicare drug benefit went into effect. The second report, “Voices of Beneficiaries: Early Experiences with the Medicare Drug Benefit,” addressed the first months of Part D coverage in 2006.

Report (.pdf)

These toplines provide the complete survey questions and findings from The Public’s Health Care Agenda for the New Congress and Presidential Campaign, conducted jointly by the Kaiser Family Foundation and the Harvard School of Public Health between November 9 and 19, 2006. The survey looks at the public’s priorities and views on health issues as a new Democratic majority takes the leadership of Congress and as the 2008 presidential campaign begins to take shape. It also includes a sample of 718 seniors, including 275 who reported being enrolled in the Medicare drug benefit, who were asked about their experiences with Medicare Part D as the open enrollment period comes to an end on December 31, 2006.

Toplines (.pdf)

The survey, which assessed seniors’ views of and experiences with the Medicare drug benefit, was conducted November 9-19 by the Kaiser Family Foundation and the Harvard School of Public Health. It included a nationally representative sample of 718 seniors, including 275 who reported being enrolled in a Medicare drug plan.

The questions about experiences under the Medicare drug benefit were part of a larger survey of 1,867 adults on the public’s health agenda for Congress and the presidential campaign. The survey’s margin of sampling error is plus or minus 4 percentage points for all seniors, and plus or minus 7 percentage points for seniors enrolled in the Medicare drug benefit.

Chartpack

Toplines

Developing home and community-based service (HCBS) alternatives to institutional care has been a priority for many state Medicaid programs over the last two decades and the focus of Medicaid policy debates recently. While the majority of Medicaid long-term care dollars go toward institutional care, the national percentage of Medicaid spending on HCBS has more than doubled from 1992 to 2003. This report presents a summary of the main trends to emerge from the data for the three Medicaid HCBS programs, and findings from the survey of policies used on 1915(c) waivers in 2005.

Issue Brief (.pdf)

The 2006 Kaiser/Hewitt survey of large businesses that provide retiree health benefits to their workers assesses their evolving responses to the new Medicare drug benefit in 2006. It also looks at the rising costs and changing benefits of retiree health coverage overall in 2006, as well as the outlook for 2007 and beyond.

The Kaiser/Hewitt study, the fifth joint survey since 2002, analyzes responses from a non-probability sample of 302 businesses with 1,000 or more employees that offer retiree health benefits. These large firms collectively provide health benefits for 5.2 million retirees and dependents, including 3.4 million Medicare-eligible retirees. Together they account for more than one quarter of the 12 million Medicare beneficiaries with retiree health benefits nationally and nearly half of the 7.2 million beneficiaries with private-sector retiree health coverage. The survey was conducted online between June and October 2006.

News Release

Report

Chartpack

Earlier Reports:

2005 Survey on Retiree Health Benefits2004 Survey on Retiree Health Benefits

Retiree Health Benefits in 2003: Employer Survey

2002 Retiree Health Survey

This paper examines the role that Medicaid plays in addressing six populations (preterm birth babies, foster care children, individuals with spinal cord and traumatic brain injuries, individuals with mental illness, individuals with intellectual and developmental disabilities, and people with Alzheimer’s disease) with serious health needs resulting in high costs. For each population profiled, the report describes the condition and the need for services and supports, as well as the role of Medicaid in meeting those needs. Profiles of real people with these conditions are also included with descriptions of model programs or cutting edge practices designed to meet the needs of these individuals.

Executive Summary (.pdf)

Full Report (.pdf)

These charts highlight data from The Public’s Health Care Agenda for the New Congress and Presidential Campaign, conducted jointly by the Kaiser Family Foundation and the Harvard School of Public Health between November 9 and 19, 2006. The survey looks at the public’s priorities and views on health issues as a new Democratic majority takes the leadership of Congress and as the 2008 presidential campaign begins to take shape.

Chartpack (.pdf)

This Kaiser Family Foundation/Harvard School of Public Health National Survey looks at the public’s priorities and views on health issues as a new Democratic majority takes the leadership of Congress and as the 2008 presidential campaign begins to take shape. It focuses, in particular, on differences and similarities among Democrats, Republicans, and those who identify themselves as Independents or something else.

The poll, conducted November 9-19, 2006, by the Kaiser Family Foundation and the Harvard School of Public Health, included a nationally representative sample of 1,867 adults, and was designed and analyzed by researchers at the Kaiser Family Foundation and Harvard School of Public Health.

Embargoed for release until:Monday, November 20, 2006

For further information contact:Craig Palosky, cpalosky@kff.org or (202) 347-5270Larry Levitt, llevitt@kff.org or (650) 854-9400

USA Today/Kaiser/Harvard Survey Highlights Problems in the Health Care System Through the Experiences of People With Cancer

Survey of Families Affected by Cancer Shows People With and Without Health Insurance Often Suffer Serious Financial Hardships

A major national survey of people affected by cancer provides an in-depth examination of how families cope with cancer and highlights problems of health insurance and health care costs through the lens of those who have experienced this major illness. The results show how health care and health insurance systems can fail to protect people when they are most in need.

Conducted jointly by USA Today, the Kaiser Family Foundation, and the Harvard School of Public Health, the survey shows the disease’s devastating impact often extends beyond an individual patient to affect entire families – sometimes causing financial crises, strained relationships, and physical and mental health issues for those who love and care for people diagnosed with cancer.

The survey found that one in four families affected by cancer say the experience led the person with the disease to use up all or most of their savings, and one in eight say they borrowed money from relatives. The illness also made it harder for some to find and keep health insurance – with about one in 10 saying they couldn’t buy health insurance because they had been diagnosed with cancer, and 6% saying they lost their coverage as a result of the disease.

Having health insurance at all times during treatment helped to limit the financial consequences of a cancer diagnosis, but even those with consistent coverage faced difficulties – one in five used up all or most of their savings, one in 10 borrowed money from relatives and 9% were contacted by a collection agency.

Among those who did not have health insurance consistently during their illness, the financial burden was even greater. More than one in four said that they delayed or decided not to get treatment because of its cost – five times the rate reported by those who had health insurance consistently. Nearly half used all or most of their savings; four in 10 were unable to pay for basic necessities; one in three sought the aid of a charity or public assistance program; and 6% filed for personal bankruptcy.

“This is one of the most disturbing of the hundreds of surveys we have done,” said Kaiser Family Foundation President and CEO Drew E. Altman, Ph.D. “When people with cancer are deferring care and experiencing such serious financial hardships because of inadequate insurance or because they have no health insurance, it casts a new light on the need to address our nation’s health insurance problems.”

While most report that employers treated them well after the diagnosis of cancer, 44% say that the family member diagnosed with cancer suffered problems at work related to their disease. This includes one in three who say the disease limited their ability to do their job, one in five who say it affected how others perceived their performance, one in 10 who had to change jobs, and one in 10 who were removed from a job because of their illness. Problems were most common among workers who earned less than $40,000, but also affected higher earners.

The survey also finds that half of families say that they experienced at least one problem related to coordination of care during the course of cancer treatment. This includes one in four who report that they received conflicting information from different doctors or other professionals involved in their care, one in five who received duplicate tests or diagnostic procedures, and one in five who were confused by the medications their doctors prescribed. Other issues include leaving a doctor’s office without getting important questions about their care answered (15%) and medical records not reaching a doctor’s office in time for an appointment (13%).

“Clearly a top priority for improving cancer care in this country is fixing this problem,” said Robert J. Blendon, Professor of Health Policy and Political Analysis at the Harvard School of Public Health and the John F. Kennedy School of Government.

Among survivors, most report some positive impacts as a result of the cancer, and many say the experience changed their outlook on life in a positive direction. Still, many report stress and strain, including health problems for family members other than the person with cancer.

The National Survey of Households Affected by Cancer is a nationally representative survey of 930 adults ages 18 years and older who say they, or another family member in their household, have been diagnosed with or treated for cancer in the past five years (excluding non-melanoma skin cancer). The survey was conducted by telephone between Aug. 1 and Sept. 14, 2006, and has a margin of sampling error of 3.6 percent.

USA Today is featuring the survey results in a series of articles beginning today. A link to those articles, as well as the full survey results and charts with key data, are available online.

The USA Today/Kaiser Family Foundation/Harvard School of Public Health Survey Project is a three-way partnership. USA Today, Kaiser, and Harvard jointly design and analyze surveys examining health care issues, with USA Today retaining editorial control over the content published by the paper.

Methodology

The USA Today/Kaiser Family Foundation/Harvard School of Public Health Survey Project is a three-way partnership. USA Today, Kaiser, and the Harvard School of Public Health jointly design and analyze surveys examining health care issues.

The National Survey of Households Affected by Cancer is a nationally representative survey of 930 adults ages 18 years and older who say they, or another family member in their household, have been diagnosed with or treated for cancer in the past five years (excluding non-melanoma skin cancer). The survey was conducted by telephone between August 1 – September 14, 2006. Telephone interviews were done by ICR/International Communications Research of Media, PA.

The margin of sampling error for the survey is plus or minus 3.6 percentage points for total respondents. For results based on smaller subsets of respondents, the margin of sampling error is higher. Sampling error is only one of many potential sources of error in this or any other public opinion poll.

The people interviewed for this survey included both people who currently have cancer or have had cancer themselves, as well as the family members of those who have/had cancer. Questions about the cancer experience, treatments, health insurance status, etc. were asked about the person with cancer specifically. For ease of reporting, we present the findings as if they were reported by the person with cancer.

# # #

The Kaiser Family Foundation is a non-profit, private operating foundation dedicated to providing information and analysis on health care issues to policymakers, the media, the health care community, and the general public. The Foundation is not associated with Kaiser Permanente or Kaiser Industries.

Harvard School of Public Health is dedicated to advancing the public’s health through learning, discovery, and communication. More than 300 faculty members are engaged in teaching and training the 900-plus student body in a broad spectrum of disciplines crucial to the health and well being of individuals and populations around the world. Programs and projects range from the molecular biology of AIDS vaccines to the epidemiology of cancer; from risk analysis to violence prevention; from maternal and children’s health to quality of care measurement; from health care management to international health and human rights. For more information on the school visit: www.hsph.harvard.edu.

A current strategy for addressing the cost of health insurance involves consumer-directed health plans (CDHPs). These plans generally are less expensive than more traditional health plan designs, but it is not clear whether the lower costs derive entirely from the new benefit structure or whether some of the savings result because these new arrangements attract a disproportionate share of enrollees in good health who have relatively low health spending. Public discussions of enrollment bias tend to be over-broad, with critics suggesting that CDHPs primarily attract the young and healthy while supporters suggest that CDHP enrollees look like other people with insurance. We illustrate that even a small shift in enrollment among enrollees who end up with high health expenses can have a meaningful impact on plan costs. Additional research will be needed to determine whether there is a health difference between people who enroll in new consumer directed health plans and those who choose more comprehensive plans and, if so, how that difference affects plan costs.

The introduction of consumer-directed health plans (CDHPs) has generated considerable debate about their potential impact on the cost and availability of health insurance. These arrangements include health plans with high deductibles that require significant up-front out-of-pocket expenses that consumers must pay for, either directly or through a tax-preferred savings device such as a health savings account (HSA) or health reimbursement arrangement (HRA).¹

Whenever consumers have a choice among different insurance arrangements, there is a tendency for people to choose a level of insurance based on their expected need for what is being covered (in this case health care). At any given price, people with a relatively high perceived need for the covered item are more likely to want coverage (and given coverage, more likely to want generous coverage) than people with a lower perceived need for the covered item. This is often referred to as “adverse selection.” Since high deductible plans generally are less generous than typical insurance policies –- particularly for people with employer-sponsored coverage –- some have raised concerns that CDHPs could disrupt the pooling of health risk in insurance markets.

CDHPs offer consumers a health plan with a lower premium but higher up-front cost sharing as compared with more traditional insurance. This tradeoff is likely be viewed differently by people with different perceived health care needs –- people with lower perceived needs may be more likely to focus on the certain premium savings relative to the potential higher out-of-pocket expenses, while people with higher perceived needs may be more likely to focus on the potential higher out-of-pocket costs relative to the premium savings. As a result, CDHPs could end up with a disproportionate number of people in relatively good health, while more comprehensive benefit plans end up with a disproportionate number of people in relatively poor health. This difference in health status among enrollees will in turn affect the claims costs for CDHPs as compared with other products, and also affect premiums unless they are adjusted to reflect the risk differences between enrollees in the different products.

Public discussions of adverse selection sometimes over-generalize the issue. For example, critics of CDHPs may suggest that they are cheaper because their enrollees are primarily young and healthy, while supporters may maintain that there is no selection because CDHP enrollees have the same characteristics as the population overall. In fact, as discussed below, relatively small differences in the enrollment of higher cost people in different plan options can have a meaningful impact on plan costs. The reason for this is that health spending is highly skewed, with a small share of people in any year accounting for a very large share of overall spending. Figure 1 shows the distribution of health spending across the U.S. population. As the figure shows, the one percent of the population with the highest health spending account for almost 24% of all expenditures; the 5% of the population with the highest health spending account for almost one-half of health expenditures; in contrast, the 50% of the population with the lowest spending account for less than 4% of total expenditures.

If even a relatively small portion of these higher spenders is able to anticipate that they are at higher risk and choose more comprehensive plans instead of less comprehensive plan options, the average claims costs of comprehensive plans would increase and the average claims costs of less comprehensive plans would decrease due to selection. The next section illustrates the potential magnitude of this effect.

Figure 1: Concentration of Health Expenditures, 2003

Examining Medical Claims

To demonstrate that a relatively small share of enrollees can have a meaningful impact on average claims costs, we present an exercise using a database of medical claims complied by the Society of Actuaries.² The database summarizes paid health insurance claims from seven insurers for 1997, 1998, and 1999. We used the 1999 data, which includes almost 1.6 million claimants representing almost $2.6 billion in paid claims. The average paid claim amount across all categories of spending was $1,633. For the exercise, we used 51 categories of claimants based on their level of paid claims (e.g., spending between $1,000 and $2,000; spending between $50,000 and $55,000) and computed the average number of claimants in each category and the average spending in each category.

As mentioned above, when looking at health care spending patterns, a small percentage of claimants account for a large share of the spending. In the database that we use here, the 11% of claimants with the highest paid claims accounted for 60% of the paid claims.³ We refer to them as top spenders.

To look at the impact of adverse selection by even a small number of the top spenders, we split the database into two identical pools, each with same number of claimants (795,869) and the same average spending for each category of paid claims. The average paid claim amount in each pool is $1,633 (the average in the database). Splitting the database in half represents what would occur if people distributed themselves randomly into two different insurance arrangements, with no tendency towards adverse selection based on perceived health needs. To then look at the potential impact of selection, we varied the percentage of the top spenders that enroll in each pool, leaving the remaining enrollment in each pool unchanged. We looked at five scenarios: (1) the initial 50%/50% split of high spenders between the pools; (2) a 52%/48% split; (3) a 54%/46% split; (4) a 56%/44% split; and (5) a 60%/40% split. What this means is that, for example, in the 52%/48% scenario, one pool enrolls 52% of the top spenders and the other pool enrolls 48% of the top spenders. The altered percentages were applied equally to each spending category for the top spenders (i.e., the top spenders that move from one pool to the other represent the average cost of all top spenders).⁴

Figure 2 show the difference in paid claims in the two the pools under each of the scenarios. For example, in the 52%/48% scenario, one pool –- which we will refer to as the adverse selection pool –- attracts an additional 2% of the top spenders from the other pool, which is an additional 3,463 claimants added to the 795,869 existing claimants in the pool. The average paid claims amount is 5% higher in the adverse selection pool than in the pool that gets the lower percentage of top spenders, which we will refer to as the favorable selection pool. Under the 54%/46% scenario, an additional 6,926 claimants join the adverse selection pool, and the difference in the average paid claims amounts in the two pools is 10%. Table 1 shows the results for each of the four scenarios, including the change in the average paid claim amount for the adverse selection pool compared with the average paid claim amount in the 50%/50% baseline scenario.

Figure 2: Average Paid Claims in Two Pools Under Four Selection Scenarios

Table 1: Change in Enrollment and Differences in Average PaidClaims Amounts Initially and Under Four Scenarios

What we can see from this exercise is that adverse selection can occur and have a meaningful impact on claims cost even where there are no extreme changes in enrollment. The enrollment shifts portrayed here would be far too small to substantially change the demographic make up of either pool in terms of age, gender, income, or other observable factors –- even the 60%/40% scenario only increases the overall census of the adverse selection pool by 2%. Generalizations about enrollment would not reveal the real differences in underlying claim costs. If bias enrollment patterns such as these persist and insurers base premiums on claims experience, or if insurers can anticipate enrollment bias and base their premiums on expected claims, then these small enrollment differences would translate into fairly significant premium differences.

Separating the impact of selection from the impact of plan design is not a new problem for health policy, nor is it one that is easily solved. For example, the issue of whether enrollees in Medicare managed care plans are healthier than enrollees in Medicare fee-for-service has been a prominent one in health policy since the mid-1980s, with numerous studies considering whether bias selection exists and how plan payments might be adjusted to account for it.⁵ Researchers will need to undertake similar studies to identify whether there is a health difference between people who enroll in new consumer directed health plans and those who choose more comprehensive plans and, if so, how that difference affects plan costs. Such research can be time-consuming and expensive, but without it, policy makers will not be able to judge the true effectiveness of new plan designs.

Notes:

1. For a discussion of how HSAs and HRAs work, see http://www.kff.org/insurance/7315/sections/ehbs05-sec8-2.cfm#HRAs. The consumer incentives tend to be stronger in HSAs than in HRAs because HSAs provide consumers with far more discretion over funds that accrue in the savings device than do HRAs.

2. See K.L. Grazier and W. G. Sell, “Group Medical Insurance Claims Database Collection and Analysis,” Society of Actuaries Research Project, September 2004, at http://www.soa.org/ccm/content/areas-of-practice/health/research/med-large-claims-exp-study/. We use the claims from the year 1999.

3. The top 11% of claimants had paid claims in excess of $3,000.

4. There are 48 spending categories among the top spenders. For the 52%/48% scenario, we assumed that 52% of the claimants in each category enrolled in one pool and 48% of the claimants enrolled in the other pool, each with a value equal to the average for the category.

5. There is a large volume of literature over a period of years. For example, see: Brown, Randell S, Dolores Gurnick Clement, Jerrod W. Hill, et al. “Do Health Maintenance Organizations Work for Medicare?” Health Care Financing Review 15(1) (1993): 7-23; Lubitz, J., J. Beebe and Gerald Riley. “Improving the Medicare HMO Payment Formula to Deal with Biased Selection.” In Advances in Health Economics and Health Services Research, vol. 6, edited by R. Scheffler and L. Rossiter. Greenwich, Conn: JAI Press, 1985; Physician Payment Review Commission. “Risk Selection and Risk Adjustment in Medicare.” In Annual Report to Congress, ch. 15. Washington, D.C.: Physician Payment Review Commission, 1996; Blumberg, Linda J., and Allison Evans. “Reform of the Medicare AAPCC: Learning from Previous Proposals.” Inquiry 35(1) (1998): 62-77; Newhouse, Joseph P., Melinda Beeuwkes Buntin and John D. Chapman. “Risk Adjustment and Medicare: Taking a Closer Look.” Health Affairs 16(5) (1997): 26-43; Mehrotra, A., Sonya Grier and R. Adams Dudley. “The Relationship Between Health Plan Advertising and Market Incentives: Evidence of Risk Selection Behavior.” Health Affairs 25(3) (2006): 5-24; Medicare Payment Advisory Commission. Medicare Brief: Medicare Advantage Benchmarks and Payments Compared with Average Medicare Fee-for-Service Spending. Washington D.C.: Medicare Payment Advisory Commission, June 2006.