Posted on October 8, 2009

Costs of Expanding Healthcare Coverage Partly Offset by Future Medicare Savings, Study Finds

Closing the healthcare coverage gap for older working-age adults could lead to substantial health gains and reduce Medicare spending, in turn offsetting almost half the costs of expanding coverage, a new study by researchers at Harvard Medical School finds.

According to the report, Medicare Spending for Previously Uninsured Adults, people who had continuous coverage between the ages of 51 and 64 cost the Medicare system significantly less than those who did not. The authors estimate that while expanding coverage for uninsured adults between the ages of 51 and 64 would cost $197 billion due to greater healthcare utilization, the improved health of that population could lower future Medicare spending by $98 billion.

Funded by the Commonwealth Fund and published online in the Annals of Internal Medicine, the study examined actual Medicare claims data and found that the previously uninsured cost Medicare over $1,000 more per person, per year than those who were insured. Indeed, almost two-thirds of the additional costs were due to potentially preventable hospitalizations and delayed elective procedures.

"The debate over health reform has focused on its costs rather than its benefits," said Commonwealth Fund president Karen Davis. "This important study shows that closing the gaps in health insurance coverage for older adults can have important benefits in controlling chronic conditions early on — contributing to better health and lower cost once they reach age 65 and qualify for Medicare. These findings point to the urgent need to act on comprehensive health reform to ensure secure and stable coverage for all Americans, and slow the rise in healthcare costs for employers, families, and government."