Academic journal article Inquiry

Spillover Effects of the Uninsured: Local Uninsurance Rates and Medicare Mortality from Eight Procedures and Conditions

Academic journal article Inquiry

Spillover Effects of the Uninsured: Local Uninsurance Rates and Medicare Mortality from Eight Procedures and Conditions

Article excerpt

The presence of a large uninsured population may create incentives to providers that affect the care delivered to all individuals in a health care market. Using Current Population Survey data on uninsurance rates and hospital discharge data on Medicare beneficiaries, this study investigates the relationship between the uninsurance rate at the metropolitan statistical area (MSA) level and inpatient quality of care delivered to Medicare beneficiaries, as measured by mortality from eight procedures and conditions. The results do not indicate large or widespread negative effects of the uninsured on Medicare beneficiaries. However, some evidence suggests that the relationship between the local uninsurance rate and Medicare mortality does vary by market size.

For at least two decades, the issue of a large and growing uninsured population has been at the forefront of health policy research. Studies have generally focused on the correlates and likely causes of uninsurance, as well as how being uninsured affects health, health care access, utilization, and expenditures. At the individual level, the conclusions are relatively clear. Lack of insurance results in limited access to care, which can lead to poor health outcomes and costly financial consequences for uninsured people (Hadley 2003).

At the market level, however, the impact of a large uninsured population is less obvious. While the uninsured themselves are likely to have limited access to care and poor outcomes, the insured population may also experience some spillover effects of a high local uninsurance rate. Low demand from a large uninsured population may change the incentives for providers to offer particular services or alter the distribution of services across patients with different types of coverage. High uncompensated care costs for the uninsured also may put financial pressure on providers, and ultimately result in spillover effects to insured individuals at the provider or market level.

In a multi-payer system such as exists in the United States, the entire distribution of insurance coverage affects the equilibrium levels of access, cost, and quality for all people. Thus the uninsured population may have a variety of spillover effects on insured members of their community; such effects have been largely neglected in studies on the consequences of uninsurance. This study explores one potential spillover effect by focusing on how the local uninsurance rate affects inpatient mortality for Medicare beneficiaries.

Previous Literature

It is well known that the insurance distribution varies widely across areas, particularly in the proportions who are uninsured and those with Medicaid and managed care coverage (Kenney et al. 2009; Cunningham and Ginsburg 2001; Dranove, Simon, and White 1998), and a number of studies have investigated the implications of such variation. Finkelstein (2007) found that the introduction of Medicare had significant effects on the market beyond its effects on Medicare beneficiaries, while several studies have documented spillover effects of market-level HMO penetration on Medicare costs, utilization, and outcomes (Baker 1999; Shen 2003; Bundorf et al. 2004).

A small body of work has recently developed on the spillover effects of the uninsured more specifically. In A Shared Destiny." Community Effects of Uninsurance, the Institute of Medicine (IOM) suggests that communities with higher rates of uninsurance may face access, cost, or quality problems, and that such concerns may be felt by the insured, as well as the uninsured, when both groups share the same providers (IOM 2003). Building on the IOM concept, recent work by Pagan and Pauly (2006, 2007) examined the relationship between local uninsurance rates and measures of unmet need for insured and uninsured individuals. They found that insured, but not uninsured, individuals in communities with high levels of uninsurance have more trouble accessing care than those in communities where uninsurance rates are lower. …

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