Does Medicare Save Lives? 

 A few weeks ago I attended a talk by David Card, a Berkeley economist currently on leave here at Harvard.  Card's talk was on a new paper, written with Carlos Dobkin and Nicole Maestos, entitled " Does Medicare Save Lives? " 


 In the paper, Card and his coauthors analyze data on over 400,000 hospital emergency room encounters in California for "non-deferrable" admissions, which are defined as conditions for which daily admissions rates do not differ during the week.  

 Given the rather strict age cutoff for Medicare* eligibility (which, with a few exceptions, starts in the month one turns 65), and the fact that using non-deferrable ER admissions helps ensure that individuals within a narrow age band have similar underlying health, the authors are able to employ a regression discontinuity design to estimate the effect on mortality of becoming eligible to receive benefits under Medicare. Strikingly, their principal finding is that Medicare eligibility reduces mortality among their study cohort by 20 percent.  That is a huge result!   

 Card mentioned in his talk that he and his coauthors were fairly surprised by the magnitude of this finding.   So, what could explain this large decrease in mortality?     

 As the authors note, the magnitude is too large to be explained by the added health benefit of gaining coverage for the 8 percent of their sample that was previously uninsured.  Moreover, the drop in mortality is also seen among individuals who had other coverage prior to Medicare.  As an alternative explanation, the authors suggest that the result may be driven by improved "insurance generosity" of gaining Medicare coverage at age 65.  That is, if a typical insurance policy for a non-Medicare eligible near-elderly citizen contains a lot of restrictions or administrative hurdles, then the more generous coverage and fewer restrictions provided by Medicare may result in more timely delivery of care, thus reducing mortality.  

 Here's one mechanism through which I think this explanation could be working.   One question I raised during the talk was whether they had any data on the mode of arrival to the ER (unfortunately, they don't).  Several years ago  I actually worked as an Emergency Medical Technician for an ambulance service in rural Tennessee, and one of the most striking things about working in prehospital care is that the vast majority of ambulance calls are for Medicare recipients.  Now, in part this is the result of the obvious fact that folks on Medicare are, on average, in poorer health than everyone else.  But, I  wonder whether the generous coverage of prehospital care under Medicare causes beneficiaries to call the ambulance, and thus receive earlier medical intervention, more than they would under a standard insurance policy (under which coverage for ambulances is more variable).   Given the  enormous clinical impact  of early intervention on mortality, particularly for conditions such as heart attacks and strokes (which likely make up a good portion of the ER sample used here), this fact could help explain much of the drop in mortality.   

 In any case, I think the Card paper is a neat example of the use of a regression discontinuity design.  The major downside to these designs, however, is that they gobble up the effective sample size, since identification essentially comes from individuals who are (assumed) to be randomly distributed around the cutoff point.  So even with 400,000 observations, it's tough for the authors to really drill down to see which specific health events are showing the biggest declines in mortality.   

 *For those not familiar, Medicare is a social health insurance program provided to elderly U.S. citizens; it's sometimes confused with Medicaid, which is an insurance program for very low-income families.