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Health Care Costs and Financing

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Education, income, and wealth all affect medical care expenditures among Medicare managed care members

More than 5 million older Americans are currently enrolled in Medicare managed care plans. Education, income, and wealth all affect the medical care expenditures of this group, concludes a new study of two Medicare managed care plans. Higher educational level and more assets increased expenditures for physician services, especially for specialist services, as well as total medical care expenditures.

More highly educated enrollees may have a better understanding of the benefits of specialist care and may be better able to navigate the managed care system in order to obtain referrals for specialist care. Also, physicians may be more likely to satisfy these patients' requests for specialist referrals or believe they are more capable of adhering to complex regiments than other patients, note the researchers.

The effect of assets on outpatient and other care expenditures was mixed. Income also affected medical expenditures. Poor enrollees had substantially higher inpatient hospital expenditures and, as a result, higher total expenditures than nonpoor enrollees. Poorer groups may have worse health to begin with. Also, if they are more likely to delay outpatient care, they may develop more severe health problems that require hospitalization.

The effect of socioeconomic status (SES) on medical care expenditures in this study was modest compared to the effects found in earlier studies of fee-for-service Medicare. Perhaps the features of the Medicare managed care plans in this study contributed to blunting SES differences in expenditures. For example, the plans did not give financial incentives to providers to limit referrals and required all enrollees to select a primary care provider.

SES was unrelated to reported ease of getting appointments, contacting providers, or obtaining referrals. While the findings suggest that preferences for health and medical care and ability to navigate the managed care system influenced health care spending, these factors did not appreciably narrow the effects of education, wealth, and income on health care expenditures.

The study was supported in part by the Agency for Healthcare Research and Quality (HS10770).

See "Socioeconomic status and medical care expenditures in medical managed care," by Kanika Kapur, Ph.D., Jeannette A. Rogowski, Ph.D., Vicki A. Freedman, Ph.D., and others, in the November 2006 Journal of Health Care for the Poor and Underserved 17, pp. 876-898.

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