Effect of Cost-Sharing on the Demand for Preventive Cardiovascular Disease Screening: Evidence from Medicare

Established in 1966, Medicare has had a profound effect on the structure and functioning of the health care system in the United States. Originally conceived to reduce the burden of excessive medical care expenses for the elderly, some have suggested that while Medicare may have stimulated major technological and medical care innovations, it also contributed to the persistent rise in US health care costs. As the incidence of debilitating and costly-to-treat chronic diseases such as diabetes, coronary heart disease, and Chronic Kidney Disease (CKD) continued to rise, calls for a shift in Medicare policy towards prevention were made.

Although preventive health care had been promoted by Health Maintenance Organizations (HMOs), it was not a clearly stated focus of health policy in the fee for service system until the Medicare Prescription Drugs, Improvement, and Modernization Act (MMA) introduced in 2003.  Effective January 1, 2005, the lipids blood screening test to ascertain the risk of cardiovascular disease, Medicare fully reimbursed providers for the cost of the tests. In addition, no copayments were required for Medicare beneficiaries.  This study examines whether this measure introduced as part of the MMA had the intended causal effect on the number of lipids blood screening tests per Medicare enrollee.

We employ a difference-in-differences estimation strategy using doctor visits data from the National Ambulatory Medical Care Survey (NAMCS) to examine the effect of the MMA on the likelihood of receiving a lipids test during a preventive office visit.  Since the policy only affected Medicare beneficiaries after 2004, we can compare the difference in the number of tests in the years before and after the policy was implemented among those age 65 and over with the same among those below age 65 with the expectation of a policy effect for the latter group after 2004.

Results showed no statistically significant difference between the two groups after the intervention.  A similar analysis using the Medical Expenditure Panel Survey (MEPS) corroborated these findings.  We did not find evidence that the MMA had the intended effect of increasing the use of preventive health care.  This suggests that the MMA had little effect on the rate of lipids blood screenings among Medicare beneficiaries.