To estimate the relative health risk of Medicare Advantage () beneficiaries compared to those in Traditional Medicare ().
Medicare claims and enrollment records for the sample of beneficiaries enrolled in Part D between 2008 and 2015.
We assigned therapeutic classes to Medicare beneficiaries based on their prescription drug utilization. We then regressed nondrug health spending for beneficiaries in 2015 on demographic and therapeutic class identifiers for 2014 and used coefficients from this regression to predict relative risk of both and beneficiaries.
Based on prescription drug utilization data, beneficiaries enrolled in in 2015 had 6.9 percent lower health risk than beneficiaries in , but differences based on coded diagnoses suggested beneficiaries were 6.2 percent higher risk. The relative health risk based on drug usage of beneficiaries compared to those in increased by 3.4 p.p. from 2008 to 2015, while the relative risk using diagnoses increased 9.8 p.p.
Our results add to a growing body of evidence suggesting receives favorable, or, at worst, neutral selection. If beneficiaries are no healthier and no sicker than similar beneficiaries in , then payments to plans exceed what is warranted based on their health status.
Data Sources/Study Setting