Medicare, adverse selection and cancer

Conventional wisdom holds that Medicare Advantage provides better service and lower cost sharing than traditional Medicare fee-for-service, and thus is attractive for many people.  However, Medicare Advantage may restrict access to providers and may be less attractive to patients with more severe illnesses.  Healthcare economists, however, do not rely on rumors and stories to make conclusions, we rely on data!

And the results from data analysis is exactly what we have from Lissenden (2018), who looks at Medicare beneficiaries recently diagnosed with cancer:

I estimate that a cancer diagnosis increases the probability a patient will leave a private Medicare plan, for the public plan, by 0.8% points (41%). Similarly, a cancer diagnosis decreases the probability a patient will leave the public Medicare plan, for a private plan, by 0.5% points (16%). The implication is that private Medicare plans are relatively less attractive to cancer patients than they are to noncancer patients.

This study does not look at all serious illnesses, but is one data point that suggests that conventional wisdom may not be totally incorrect.

 

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