The Role of Consumer Knowledge on the Demand for Preventive Health Care Among

the ElderlyStephen T. Parente, Ph.D., Project HOPE Center for Health

Affairs and Johns Hopkins University

David S. Salkever, Ph.D., Johns Hopkins University and NBER

Joan DaVanzo, Ph.D., The Lewin Group (Formerly of the Barents Group, LLC)

Research sponsored by the Health Care Financing Administration, (Contract #500-95-0057/Task Order 2)

Presentation Overview

• Study Objectives

• Supporting Literature

• Modeling Approach

• Estimation Results

• Policy Implications

• Next Steps

Study Objectives

• Develop an economic model to of demand to estimate the direct effect of information on the preventive service utilization.

• Identify the effect of income, education and insurance coverage, controlling for information effects.

• Estimate the benefits of a fully informed non-institutionalized population.

• Identify characteristics of a ‘knowledgeable’ Medicare beneficiary .

Literature Supporting ResearchRole of consumer information on

medical care demand

• Arrow (1963): Patients rely on providers and insurers to act as their agents.

• Pauly & Satterthwaite (1981): First empirical analysis of the role of consumer information’s indirect effect on demand.

• Kenkel (1990): Estimated the direct effect of information on medical visit demand.

• Hsieh and Lin (1997): Estimate effect of information on preventive services in Taiwan.

Literature Supporting ResearchKnowledge of Health Services and Health

Insurance Benefits

• McCall et al (1986): Medicare beneficiaries in six States have a low level of knowledge of Medicare benefits and supplemental policies..

• Issacs (1996); Blendon et al, (1997): Significant misunderstanding among the general population regarding managed care and entitlement programs.

• Barents/Project HOPE/Westat (1998): General probability sample of 1996 Medicare non-institutionalized beneficiaries suggests people learning principally by experience.

Unexplored Areas• The direct effect of knowledge (not information) on the

demand for Preventive Services in the Medicare population.• The impact of recent change in preventive care benefit

design on the use of preventive care.• The direct effect of Medicare program knowledge on

curative medical care utilization and cost.• The $120 Million (Medicare +Choice) question: Will

better informed beneficiaries have different in their health care use, cost, health status, and satisfaction than uninformed beneficiaries?

Modeling Approach

• Model the demand for influenza vaccination and mammography screening among Medicare beneficiaries (both were covered benefits as of 1992).

• Use a two part model of demand• Treat beneficiary knowledge of the preventive

care benefit as endogenous.• Use IV estimation with instrument(s) for

beneficiary knowledge of the benefit.

Two Part Demand Model for Preventive Care

– Eq. 1: Ki = a0 + a1Xi + ui

– Eq. 2: Di = b0 + b1Yi + b2Ki + vi

Ki = knowledge of beneficiary I

Xi = vector of patient characteristics relevant to obtaining K

Di = preventive service demand (0,1)

Yi = beneficiary attributes

ui and vi random error terms

Eq. #2 provides a reduced form demand expression

Data: Medicare Current Beneficiary Survey (MCBS)

• Panel survey of (~14,000) beneficiaries offered every year since 1991.

• Household interview that occurs in three rounds annually.

• Self-report survey data is linked to Medicare claims data for the non-Medicare risk HMO population.

• Provides: cost and use information (including drug use), SES, health status, functional status.

Data Used for this analysis -1

• 1996 calendar year MCBS population• Three rounds of combined data:

– Round 16: Cost and Use, Medicare claims for all 1996 attached.

– Round 17: Includes supplemental questionnaire regarding beneficiaries ‘information needs’.

– Round 18: Includes supplemental questionnaire on specific Medicare benefit and program knowledge.

Data Used for this Analysis -2

• Selected a subset of non-institutionalized elderly. (N=9735 all, 5601 women)

• Dependent Variables:– Mammography screening use (for women): 1=yes, 0=no– Flu shot: 1=yes, 0= no

• Explanatory Variables (e.g., benefit knowledge): – True (1) or false (0), Medicare covers flu shot /mammography?

• Control Variables (demand shifters):– Income, Education, Network effects– Insurance (supplemental, dual eligibility)– SES, Health status, functional status

Data Used for this Analysis -3

• Key Instrumental Variable for Benefit Knowledge:– Combined score of Medicare program quiz questions:

• ‘A physician who accepts assignment can not charge whatever they want’?

• ‘You have the right to appeal a decision made by Medicare regarding a covered benefit’?

• ‘Physical exams are a covered Medicare expense’?• 21.5% got all three right.

• Second Instrument:– Correct Knowledge of the ‘other’ preventive care benefit.

Descriptive Statistics of Key Variables

• Flu Shot: Mean STD– Use: 64.9% (0.477)– Correct Knowledge: 76.4% (0.425)

• Mammogram (women only)– Use: 39.4% (0.489)– Correct Knowledge 66.2% (0.473)

• Program Rules 21.5% (0.411)– women only 19.9% (0.399)

First Stage Results-1Flu Shot Benefit Knowledge

-0.1 0 0.1 0.2 0.3

Marginal effects on Flu Shot Knowledge

MAMKNOW

MALE

MCAREKNOW

MEDIGAP

MARRY

HEART

SOUTH

NORTH CEN

RURAL

DIABTS

EDULEV5

STROKE

BLACK

Ben

efci

ary

Att

ribu

tes

First Stage Results-2Mammography Benefit Knowledge

-0.2 -0.1 0 0.1 0.2 0.3 0.4Marginal effects on Mammography Knowledge

FLUKNOW

PUERTO RICO

MCAREKNOW

BLACK

WEST

EDULEV4

MEDIGAP

INCOMELEV3

EMPHYS

DIABTS

DUAL ELL.

INCLEV2

EDULEV3

AGE7584

IADLBILS

OTHER RACE

OVER85

Ben

efci

ary

Att

ribu

tes

Second Stage Results-1Flu Shot Use

-0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2 0.25 0.3Marginal effects on Flu Shot Use

FLUKNOW

OVER85

EMPHYS

DIABTS

WEST

HEART

AGE7584

INCLEV2

MEDIGAP

EDULEV3

MARRY

EDULEV2

CANCER

INCLEV2

HOUSEHOLD

EX/GOOD HLTH

ADL4to5

BLACK

Ben

efci

ary

Att

rib

utes

Second Stage Results-2Mammography Screening Use

-0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2Marginal effects on Mammography Use

MAMKNOW

INCLEV3

CANCER

EDULEV3

EDULEV2

MARRY

MEDIGAP

HEART

RURAL

ADL1TO3

AGE7584

ADL4TO5

OVER85

Ben

efci

ary

Att

rib

utes

Key Findings

• Knowledge of a preventive care benefit appears to have the greatest impact on demand.

• Income, supplemental coverage and education level have a positive impact on the demand for services.

• Mixed results regarding race. Black beneficiaries less likely to get a flu shot, but there is not a similar finding for mammography. May reflect an interaction between race and gender.

Policy Implications

• If all non-institutionalized beneficiaries were knowledgeable about prevent care benefits:– 1.5 million for beneficiaries immunized (9.1% increase)– ~1 million more females screened (14.7% increase)

• Per beneficiary annual cost-saving for flu shot is $1.64 to $9.03 depending on health status.

• Medicare will spend $3 per year on beneficiaries for consumer education.

• Medicare’s goal of increasing preventive service use further will depend on the marginal cost of reaching one more beneficiary.

Next Steps

• Control for impact of prior use of services on knowledge.

• Compare results from 2SLS to bivariate probit results.

• Examine effect of knowledge on health care utilization and cost.

• Develop new instruments for Medicare +Choice analysis using the MCBS.

Solicitation for Future Instruments to be included in MCBS Supplement

• Current list includes:– Most people covered by Medicare can choose among different kinds of

health insurance plans within Medicare (T/F). – Medicare by itself doesn=t pay for all of [your/(SP=s)] health care

expenses.– The government is trying to force some people on Medicare to join

HMOs even if they don=t want to.– People can complain to Medicare about their HMOs or supplemental

plans if they are not satisfied with them. – HMOs that cover people on Medicare often cover more health services,

like prescribed medicines, than Medicare by itself.

– If (you/SP) join(s) an HMO that covers people on Medicare, (you/SP) will

have fewer benefits than if (you/SP) just had Medicare by itself. – If (you/SP) join(s) an HMO that covers people on Medicare, (you are/SP

is) allowed to drop out only during certain times of the year and still be covered by Medicare.