Effects of Medicare Coverage for the Chronically Ill on Health Insurance, Utilization, and Mortality

Abstract

I study the effect of the 1973 expansion of Medicare coverage to individuals with End-Stage Renal Disease (ESRD) on insurance coverage, health care utilization, and mortality. Between the ESRD expansion and a simultaneous expansion of Medicare coverage to long-term Social Security Disability Insurance (SSDI) recipients, insurance coverage increased by 4.4 to 8.3 percentage points and the bulk of the increase in insurance coverage was due to an increase in Medicare coverage. The expansion was also associated with an increase in physician visits and a seven log point reduction in mortality from kidney disease, which I replicate in cross-country comparisons. Lastly, I provide evidence for two mechanisms that affected mortality: 1) an increase in access to and use of treatment, which is plausibly driven by changes in insurance coverage; and 2) an increase, by 1975, in entry of dialysis clinics in areas with a greater burden of kidney disease in 1971. Based on changes in the ages at which people died form kidney disease and all other causes, the ESRD program cost between $29000 and $245000 per life year saved, which includes a range of welfare improving values.