Table 2-3, drawn from an independent analysis of MCBS data by Bruce Stuart et al. for the Commonwealth Fund, shows differences in utilization and spending for Medicare beneficiaries who had drug coverage throughout 1996, during part of the year, or at no time during the year. It has been observed for other types of medical coverage that people with part-year coverage use more services during their covered period than people with full-year coverage use during a similar period; in effect, they are using their coverage to deal with previously unattended problems. However, this sort of catch-up effect does not appear to be applicable for prescription drugs. While someone can postpone elective surgery, for example, people who do not obtain needed medications during a period without coverage cannot make up for this when they obtain coverage.
Instead, it seems likely that people who have coverage for only part of a year will act like noncovered people during their period without coverage and like other covered people during their period with coverage. In fact, beneficiaries even with 7 to 9 months of coverage spend only 12 percent ($58) more than beneficiaries who are uncovered all year. Table 2-3 and Figure 2-4 show that the more substantial increase in utilization occurs when a beneficiary has drug coverage for at least 10 months.
|Months of drug coverage during 1996|
|Total||Never covered||1-3 months||4-6 months||7-9 months||10-11 months||Always covered|
|Annual prescription drug spending||$688||$468||$524||$539||$526||$655||$828|
|Annual prescription spending out of pocket||$316||$468||$341||$341||$204||$237||$219|
|Proportion of drug spending paid out of pocket||46%||100%||65%||63%||39%||36%||26%|
|Proportion of beneficiaries||95%*||28%||2%||5%||5%||2%||53%|
|*The total equals 95% because duration of insurance coverage could not be determined for 4.7% of beneficiaries (had claims paid but did not report coverage.
Source: Bruce Stuart tabulations of MCBS, 1996, for noninstitutionalized beneficiaries enrolled in Medicare for the entire year.
Figure 2-4. Out-of-pocket and Insurer Spending on Prescription Drugs by Medicare Beneficiaries, by Duration of Drug Coverage, 1996
Note: 4.7% of beneficiaries had drug coverage for an unknown number of months (had claims paid but did not report coverage).
Source: Bruce Stuart tabulations of MCBS, 1996 for noninstitutionalized beneficiaries enrolled in Medicare for the entire year.
Much of the MCBS data presented elsewhere in this report, and all the MEPS data, treat individuals as having drug coverage if they have coverage at any time during the year. Because people with part-year coverage have lower utilization and spending than those with full-year coverage, their inclusion lowers the averages for the covered group. As a result, the real differences between people who do and do not have coverage at a given point in time are understated throughout this report.
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