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U of M researcher: Supplemental Medicare coverage leads to significantly higher rates of overall spending growth over time

In the first empirical study of the role supplemental insurance coverage might play in Medicare spending growth, researchers at the University of Minnesota School of Public Health and Harvard Medical School found that employer-sponsored and self-purchased supplemental coverage were associated with annual spending growth rates of 7.17 percent and 7.18 percent, respectively, compared to 6.08 percent for beneficiaries without supplemental coverage.

The study, “Supplemental Coverage Associated With More Rapid Spending Growth For Medicare Beneficiaries” examines trends in Medicare spending. The study, which appears in the May issue of Health Affairs, was led by Ezra Golberstein, Ph.D., assistant professor in the University of Minnesota School of Public Health.

“Medicare spending is growing at a rate that is unsustainable and this spending growth is the biggest long-term public policy challenge facing the country,” said Golberstein. “In spite of the importance of slowing the rate of spending growth, we lack a solid understanding of what we can do to actually bend the cost curve.”

Golberstein and his collaborators from Harvard Medical School used data from the Medicare Current Beneficiary Survey from 1992 to 2005, before Medicare Part D prescription drug benefits were introduced, and analyzed a sample of 104,365 observations. The researchers found significantly higher rates of spending growth in all supplemental insurance categories compared to the category without supplemental insurance, even while controlling for sociodemographic, disease, disability, and health behavior characteristics.

“Supplemental coverage reduces cost-sharing for beneficiaries, but we find that it is also associated with higher rates of spending growth for Medicare beneficiaries,” added Golberstein. “These findings suggest that the anticipated declines in employer-sponsored coverage for future retirees and the introduction of policies which would restrict Medicare supplemental coverage may hold the potential to slow rates of spending growth.”

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