Estimating Regression-Based Medical Care Expenditure Indexes for Medicare Advantage Enrollees

Hall Anne E. ()
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Hall Anne E.: Bureau of Economic Analysis – Office of the Chief Economist, 1441 L St. NW, Washington, District of Columbia 20005, United States of America

Forum for Health Economics & Policy, 2016, vol. 19, issue 2, 261-297

Abstract: I construct a disease-based medical expenditure index for Medicare Advantage (private plan) enrollees using data from the Medicare Current Beneficiary Survey from 2001 to 2009. I create the indexes by modeling total health-care expenditure as a function of each respondent’s diagnoses. Total medical inflation for this population is found to be 5.7 percent annually. By comparison, medical inflation in the Medicare fee-for-service (FFS) population is 4.5 percent annually. The difference is partly due to differential reporting of drug and nondrug spending in the MCBS for FFS beneficiaries; once this is corrected for, inflation among FFS beneficiaries is 5.0 percent. The remaining difference results from drug spending increasingly more rapidly among Medicare Advantage enrollees. I show that the introduction of Part D accounts for much of, and possibly all the remaining gap in inflation.

Keywords: economic measurement; inflation; Medicare; Medicare Advantage; Medicare Part D (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1515/fhep-2015-0031

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