Perspectives on Health Reform May 2009 The Long Wait: The Impact of Delaying Medicare Coverage for People with Disabilities At a particularly difficult point in their lives, disabled individuals must wait two years before they are eligible to begin receiving Medicare benefits—a delay that can By Stuart Guterman block access to needed care and relief from financial pressures. Although the cost to with Heather Drake the federal government of eliminating the Medicare waiting period seems high, it would actually represent only a small percentage increase in Medicare spending. Individuals who are unable to continue working because of a long-term disability face multiple challenges. By definition, they have experienced a downturn in their health status, disrupting their life and forcing them to give up their liveli- hood. Their poor health status means additional medical bills at a time when they have lost their source of income and, in many cases, their health insurance cover- age. The Social Security Disability Insurance (SSDI) program was created in 1956 to help disabled individuals overcome the financial burdens they face because of involuntary retirement. In 1972, Medicare coverage was extended to people under age 65 who are eligible for SSDI benefits. However, this coverage becomes available to individuals only after a 24-month wait from the time they begin receiving SSDI benefits.1 As of December 2007, there were 7.6 million SSDI beneficiaries; of those, approximately 1.8 million were in the 24-month waiting period for Medicare coverage.2 Therefore, nearly one-quarter of Americans who are arguably in greatest need of health care are left to fend for themselves while they wait for Medicare coverage to begin. The time has come to end this long wait. Several recent studies focused on the human costs of the delay in Medicare coverage. The Medicare Rights Center described the experiences of 21 disabled individuals struggling to obtain and pay for needed care during the time between their entry into the SSDI program and their eligibility for Medicare.3 To download this publication and learn about others as they become available, visit us online at www.commonwealthfund.org and register to receive Fund e-Alerts. Commonwealth Fund pub. 1275 Vol. 3 2 T he  C ommonwealth F und In a new analysis, Livermore et al. examine among people who have entered SSDI within the past data on the health status, coverage, and access to care year as it is among those who are less than a year of people who eventually became eligible for SSDI away from disability status, and the number of short- benefits, focusing on the three years prior and the three stay hospital days is almost three times as high (data years following eligibility.4 Their analysis sheds new not shown). light on the experiences of persons with disabilities— again raising the question of why people who are cate- Figure 2. Health Status and Activity Limitations, by SSDI Cohort gorically eligible for Medicare are denied that cover- Percent of cohort age when they are perhaps most in need of it. 100 88.8 91.0 92.1 90 80 63.9 Disability, Poverty, and Health Status 70 60 The analysis by Livermore et al. shows that the likeli- 50 40.7 45.3 38.8 36.1 40 33.1 hood of living in a family whose income is below the 25.3 30 federal poverty level is twice as high among people 20 10.2 12.3 Poor health status 10 Activity limitations receiving SSDI benefits as among those who have not 0 25–36 13–24 1–12 1–12 13–24 25–36 yet become disabled (Figure 1). Not surprisingly, the months months months months months months prior prior prior after after after onset of disability is related to a sharp decline in Time relative to SSDI entry health status. While 12.3 percent of individuals in the Source: G. Livermore, D. Stapleton, and H. Claypool, Health Insurance and Health Care Access Before and After SSDI Entry (New York: The Commonwealth Fund, May 2009). second year prior to SSDI entry report being in poor health (more than four times the percentage in the overall working-age population), that percentage more Health Coverage and Access to Care for than doubles among those in the year prior to SSDI the Disabled entry and rises substantially for those in the first year Livermore et al. also found that people who will after disability (Figure 2). Limitations in the ability to become eligible for SSDI benefits are significantly conduct routine daily activities are reported much more likely to be uninsured than other workers—an more commonly among the cohort in the third year average of 22 percent over the three years prior to prior to SSDI entry than among the working-age popu- SSDI entry, compared with 16 percent in the general lation as a whole, but the likelihood of those limita- population (Figure 3). The likelihood of having private tions rises sharply with the onset of disability. The coverage declines with eligibility for SSDI, with that average number of doctor visits is about twice as high decline largely offset by an increase in Medicaid cov- erage. The transition to disability status does not appear to be smooth. In the year before and after SSDI Figure 1. Income Below Federal Poverty Level, by SSDI Cohort eligibility, there is a large increase in the proportion of Percent of cohort individuals reporting they were unable to get needed 30 care, and a similarly large increase in the proportion 25 23.5 24.5 22.4 pointing to lack of insurance or cost as the reason. 20 Access to health care seems to be a major problem for 15 11.7 10.9 10 10.4 people who become disabled. 5 Some SSDI beneficiaries, like others who lose 0 their jobs, have the option of maintaining their 25–36 13–24 1–12 1–12 13–24 25–36 months months months months months months prior prior prior after after after employer-sponsored health coverage under provisions Time relative to SSDI entry in the Consolidated Omnibus Budget Reconciliation Source: G. Livermore, D. Stapleton, and H. Claypool, Health Insurance and Health Care Act of 1985 (COBRA) that allow former employees to Access Before and After SSDI Entry (New York: The Commonwealth Fund, May 2009). P erspectives on H ealth R eform : T he I mpact of D elaying M edicare C overage for P eople with D isabilities 3 et al. found that gaining access to Medicare coverage Figure 3: Sources of Health Insurance substantially increases use of recommended preventive All persons 25–36 mo. 13–24 mo. 1–12 mo. 1–12 mo. 13–24 mo. 25–36 age 18–64 before SSDI before SSDI before after SSDI after SSDI mo. after SSDI SSDI services among previously uninsured older adults. Uninsured (%) 16 22 21 23 23 17 4 Uninsured older adults receive fewer basic clinical ser- Private – own 41 40 41 37 26 21 16 vices, are more likely to experience health declines, employer (%) Private – family 41 39 37 33 30 35 31 and die at younger ages than insured adults in the member employer (%) same age group. Once they become eligible for Medicaid (%) 5 6 7 8 17 21 29 Medicare, older adults who had been uninsured incur Medicare (%) 2 1 3 2 4 11 61 (respondent) higher program costs for a sustained period of time, Medicare-covered 2 2 1 1 5 45 92 compared with those who had prior coverage. Medicare during year of NHIS interview (%) (CMS) coverage leads to dramatic improvement in health Source: G. Livermore, D. Stapleton, and H. Claypool, Health Insurance and Health Care trends for people who did not have prior coverage.6 Access Before and After SSDI Entry (New York: The Commonwealth Fund, May 2009). Of course, eliminating the Medicare waiting period would have a cost. The Congressional Budget keep their insurance by paying 102 percent of the Office (CBO) estimates that doing so in 2011 would combined employee and employer share of the cost of result in a net cost to the federal government of $6.8 coverage. Disabled former employees are eligible for billion in the first year and $110 billion through 2019. COBRA coverage for up to 29 months (the limit for This estimate reflects a $32 billion reduction in the the non-disabled population is 18 months), but federal portion of Medicaid and $3 billion in addi- employers are allowed to charge 150 percent of the tional tax revenues, but it does not take into account combined premium during the additional 11 months. the reduction in state Medicaid spending.7 Even reduc- In 2006, this amount averaged $350 per month. The ing the Medicare waiting period to 12 months would high COBRA premium, even at the 102 percent rate, cost the federal government $62 billion through 2019, proves unaffordable for many. A recent Commonwealth according to the CBO. Fund study found that only 9 percent of unemployed workers have COBRA coverage.5 Conclusions According to congressional committee reports on the Impact of Eliminating the Delay in 1972 legislation, the original purposes of the waiting Medicare Coverage period were to keep program costs down, avoid over- The analysis by Livermore et al. highlights the chal- lapping with private insurance, and ensure that lenges that confront disabled individuals—challenges Medicare coverage would be available only to those that are exacerbated by their lower levels of education, whose disabilities are truly severe and long-lasting.8 higher rates of poverty, and poorer health status even Dale and Verdier examined these reasons and con- before they become disabled, as well as the changes in cluded that “they seem less compelling today.”9 their circumstances that accompany their disability. At Although the cost of eliminating the waiting period for a particularly difficult point in their lives, disabled disabled individuals seems high, it would be only a individuals must wait two years before they can receive small percentage increase in Medicare spending, and the Medicare benefits that could help them obtain access could bring important benefits to the program as well to the care they need and relief from financial pressures. as to beneficiaries. Moreover, states would see their Providing coverage to older adults during the Medicaid and other public assistance spending go period leading up to Medicare eligibility has been down, as many of those waiting for Medicare must shown to bring health benefits, and could potentially find other public sources of coverage. help to control the costs of the program. McWilliams 4 T he  C ommonwealth F und With health reform and universal coverage prime topics of current policy discussions, ending the Medicare waiting period may become a moot issue. However, even universal coverage provisions may require that existing public programs maintain respon- sibility for the populations they now serve. One way or another, the policy that has been left in place for 37 years—and which today puts nearly 2 million people in limbo—should not be allowed to continue. Stuart Guterman is an assistant vice president at The Commonwealth Fund, where he directs the Program on Medicare’s Future. Previously, he was director of the Office of Research, Development, and Information at the Centers for Medicare and Medicaid Services; senior analyst at the Congressional Budget Office; principal research associate in the Health Policy Center at the Urban Institute; deputy director of the Medicare Payment Advisory Commission (and its predecessor, the Prospective Payment Assessment Commission); and chief of institutional studies in the Health Care Financing Administration’s Office of Research. He can be e-mailed at sxg@cmwf.org. Heather Drake is a program assistant at The Commonwealth Fund, where she works on issues related to Medicare and health system performance. Previously, she was an analyst assistant for the public opinion polling firm Peter Hart Research Associates and a research assistant for Hezel Associates, working with clients from the education field. Ms. Drake graduated magna cum laude from the Maxwell School at Syracuse University, earning a B.A. in political science. She is currently pursuing a master’s degree in public health at George Washington University. Editorial support was provided by Martha Hostetter. P erspectives on H ealth R eform : T he I mpact of D elaying M edicare C overage for P eople with D isabilities 5 N otes 5 M. M. Doty, S. D. Rustgi, C. Schoen, and S. R. Collins. Maintaining Health Insurance During a 1 In fact, SSDI recipients must wait five months after Recession: Likely COBRA Eligibility (New York: the onset of their disability to begin receiving those The Commonwealth Fund, Jan. 2009); the American benefits; the wait for Medicare coverage is therefore Recovery and Reinvestment Act of 2009 provides 29 months from that point. subsidies for unemployed workers who are eligible for COBRA coverage. 2 Total Disabled Social Security Disability Insurance (SSDI) Beneficiaries Ages 18–64, Dec. 2007, avail- 6 J. M. McWilliams, A. M. Zaslavsky, E. Meara et al., able at http://www.statehealthfacts.kff.org/compare- “Impact of Medicare Coverage on Basic Clinical table.jsp?ind=344&cat=6&sub=83&yr=62&typ=1 Services for Previously Uninsured Adults,” Jour- &sort=a&o=a (accessed April 7, 2009); and Con- nal of the American Medical Association, Aug. 13, gressional Budget Office, Budget Options: Volume I 2003 290(6):757–64; J. M. McWilliams, E. Meara, (Washington, D.C.: Congressional Budget Office, A. M. Zaslavsky et al., “Use of Health Services Dec. 2008):41–42. by Previously Uninsured Medicare Beneficiaries,” New England Journal of Medicine, July 12, 2007 3 R. M. Hayes, D. Beebe, and H. Kreamer, Too Sick to 357(2):143–53; J. M. McWilliams, E. Meara, A. M. Work, Too Soon for Medicare: The Human Cost of Zaslavsky et al., “Health of Previously Uninsured the Two-Year Medicare Waiting Period for Ameri- Adults After Acquiring Medicare Coverage,” Journal cans with Disabilities (New York: The Common- of the American Medical Association, Dec. 26, 2007 wealth Fund, April 2007). 298(24):2886–94. 4 G. Livermore, D. Stapleton, and H. Claypool, 7 CBO, Budget Options, 2008. Health Insurance and Health Care Access Before and After SSDI Entry (New York: The Common- 8 S. B. Dale and J. M. Verdier, Elimination of wealth Fund, May 2009). Medicare’s Waiting Period for Seriously Disabled: Impact on Coverage and Costs (New York: The Commonwealth Fund, July 2003). 9 Ibid. The mission of The Commonwealth Fund is to promote a high performance health care system. The Fund carries out this mandate by supporting independent research on health care issues and making grants to improve health care practice and policy. Support for this research was provided by The Commonwealth Fund. The views presented here are those of the au- thors and not necessarily those of The Commonwealth Fund or its directors, officers, or staff.