Date post: | 13-Jan-2016 |
Category: |
Documents |
Upload: | loreen-bishop |
View: | 215 times |
Download: | 1 times |
Incorporating Time to Death into Medicare FFS A+B Projections
Liming Cai, Ph.D
Andrew Madison
Office of the Actuary
Centers for Medicare and Medicaid Services
Middle Atlantic Actuarial Club Annual Meeting
September 13, 2012
2
Outline The age-sex adjustment
The age-sex-time to death (TTD) adjustment
Data
Methods
Results
Conclusion
Discussion
3
Medicare FFS Spending Projection Medicare FFS population
Per capita FFS spending Short run
Demographics Price updates Residuals
Long run Demographics Residuals
4
The Demographic Adjustment by Age and Sex Calculate average spending for 65+ by sex and
5-year age groups (except for 85+) relative to average spending for all 65+ over a three-year base period (2008-2010)
For each of the next 75 years, multiply the fixed relative spending estimates by the age distribution of beneficiaries to derive weighted average relative spending
Multiply this relative spending by average spending in a base year (2010 for TR 2012) and the number of beneficiaries in the year for which spending is projected to derive total Medicare spending projections
T
t
ytty NavgTotal $$
5
Assumptions and Implications of the Age-Sex Adjustment Assumes future 85+ as expensive as today’s
85+, holding everything else constant Total spending is driven by the age-sex
distribution of future beneficiaries only As mortality rates fall and people live longer,
there are more expensive elderly, and hence higher spending
1999
2003
2007
2011
2015
2019
2023
2027
2031
2035
2039
2043
2047
2051
2055
2059
2063
2067
2071
2075
2079
2083
2087
5.00%
10.00%
15.00%
20.00%
25.00%
Proportion of 85+ in FFS Part A (SSA TR2012)
6
Average AB Spending Varies by Age
65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 101
103
105
0
2000
4000
6000
8000
10000
12000
14000
16000
Age
1997
2002
2006
2010
Source: CMS 100% claims file. FFS AB spending on aged-in benes only.
7
Why Are 85+ More Costly? Closer to death – demographic reason
65 68 71 74 77 80 83 86 89 92 95 98 101
104
107
110
113
116
119
0
0.2
0.4
0.6
0.8
1
Age
Men
Women
2012 mortality rate at ages 65-119 (SSA TR2012)
8
Why Are 85+ More Costly? End of life care is expensive – non-
demographic reason Recent OACT study, Riley and Lubitz (2010, HSR)
– 25-30% stable since 1970s
0 1 2 3 4 5 6 7 8 9
10 11 12 13 14 15
0
10000
20000
30000
40000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1992 19931994 19951996 19971998 19992000 20012002 20032004 20052006 2007
Year Before Death
Part
AB
Spen
ding
(200
8 $)
Source: 1992-2008 MCBS. Decedents only. Year measured as 12-mo interval.
9
Calculation of Avg. Spending at Age t Average spending at age t can be calculated
as
i.e., the sum of the product of avg. spending at year i before death and the dist. of time to death.
Example: Avg. spending for 85-year old men=$25K
Time to Death (TTD) 0 1 2 3 4+
Dist. of TTD 10% 15% 20% 25% 30%
Average $ 50K 40K 30K 20K 10K
Constant age-specific spending implies fixed time to death distributions at age t.
t
N
j
jtt Navg
t
$$ TTD
i
it
it propavg$
10
SSA TR2012 Projection - Survival Probabilities
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2010
2035
2085
Pro
babilit
y o
f Surv
ival
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2010
2035
2085
Age
Pro
babilit
y o
f Surv
ival
Source: SSA TR2012 intermediate projections.
Men
Women
11
SSA TR2012 Projection – Life Expectancy
0
5
10
15
20
25
2010 20352085
Year
26.7%
51.3%
0
5
10
15
20
25
30
2010 20352085
Age
Ye
ar
19.7%
46.1%
Men
Women
Source: SSA TR2012 intermediate projections.
12
SSA TR2012 Projection - Time to Death
0 1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435+
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
2010
2035
Men
0 1 2 3 4 5 6 7 8 9 1011121314151617181920212223242526272829303132333435+
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2010
2035
2085
Year Before Death
Women
Source: SSA TR2012 intermediate projections.
13
The Age-Sex-TTD Adjustment Adds a 3rd dimension
Spending by TTD, age group, sex and year TTD distribution by age group, sex and year Number of beneficiaries by age group, sex and year
Recognizes that Higher proportion of 85+ is caused by shifts in TTD
dist. Shifts in TTD dist. imply that future 85+ are not as
expensive as today’s 85+, holding everything else constant
TTD is not the same concept as population health Technical Panel in 2000 recommended distinguishing
between decedents and survivors CBO has incorporated TTD into CBOLT
14
Data The IDR 100% sample of beneficiary claims in 2011
1.2 million decedents in 2011 among 28 million “aged-in” benes age 65-115 with equal A & B exposure months. 5.9 million observations of spending of up to 4 years before death
Decedents’ spending in 2007-2010 are inflated to 2011 dollar using OACT’s personal health care spending index
5 age groups: 65-69, 70-74, 75-79, 80-84, 85+
Average spending in TTD=0,1,2,3,4+ weighted by member months, consistent with the age-sex method Decedents’ spending in TTD=0 is actual 2011 $, NOT last-12 mo
$ Average (exposure-weighted) spending in TTD=4+ is calculated
using 2007 spending for all 2011 benes because of large spending differentials in 2007 between decedents and survivors.
15
Average Spending by Time To Death for 2011 Decedents
0 1 2 3 4 -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
65-6975-7985+
Year Before Death
Male Decedents
0 1 2 3 4 -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
65-6975-7985+
Year Before Death
Female Decedents
Source: IDR 2011 FFS AB decedents.
16
Projection of FFS AB Spending in 2012-2087 The age-sex method
Relative spending ratios in baseline (2011), by age group and sex, are multiplied by average spending in 2011 ($10,059 for men and $10,084 for women), and the number of beneficiaries in 2012-2087 in the corresponding age group and sex cells
The age-sex-TTD method
Theoretical TTD distributions for 2012-2087, by age group and sex Estimated from SSA TR2012 intermediate life tables using
microsimulation
Average spending of 2011 decedents by age group, sex and TTD are multiplied by the number of beneficiaries in the corresponding age group, sex and TTD cells A set of adjustment factors, by sex and age groups, is applied to
ensure that projected 2011 spending are equal for both methods. Unadjusted difference in 2011 spending is 7% or less due to imperfect information in 2012
17
Projection Results
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
2065
2066
2067
2068
2069
2070
2071
2072
2073
2074
2075
2076
2077
2078
2079
2080
2081
2082
2083
2084
2085
2086
2087
200
300
400
500
600
700
800
900
1000
1100
$973.85
$869.29
FFS
AB S
pend
ing
(Bill
ion,
in 2
011
dolla
rs) Cumulative difference is $3.77 trillion or 7.21% of
age-sex results (2011 dollars).
Age-Sex-TTD
Note: Calculation based on 2007-2011 IDR data and SSA TR2012 intermediate projections.
Age-Sex
18
Projection Results
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
2055
2056
2057
2058
2059
2060
2061
2062
2063
2064
2065
2066
2067
2068
2069
2070
2071
2072
2073
2074
2075
2076
2077
2078
2079
2080
2081
2082
2083
2084
2085
2086
2087
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1.40%
1.60%
1.80%
2.00%
Year
FFS
AB S
pend
ing
(in 2
011
dolla
rs)
Cumulative difference is 3.37% of GDP.
Age-SexAge-Sex-TTD
Note: Calculation based on 2007-2011 IDR data and SSA TR2012 intermediate projections.
19
Conclusion The age-sex-TTD method projects lower
Medicare spending than the current age-sex method
The age-sex-TTD adjustment Consistent with all SSA demographic assumptions Sets the lower bound of projection
2012
2015
2018
2021
2024
2027
2030
2033
2036
2039
2042
2045
2048
2051
2054
2057
2060
2063
2066
2069
2072
2075
2078
2081
2084
2087
9000
9200
9400
9600
9800
10000
10200
10400
10600
Per
Capit
a S
pendin
g (
2011
Dollar)
Trends in per capita spending implied by the two methods
Age-Sex
Age-Sex-TTD
20
Will the Pattern of Spending by TTD Change?
This stable historical pattern reflects two fundamental principles
What is going to change? Shape – Immortality? Death panel? The answer is No. Level – Very likely due to a variety of factors, which is not part of
demographic adjustment and, more importantly, will affect both methods equally.
0 1 2 3 4 5 6 7 8 9
10 11 12 13 14 15
0
10000
20000
30000
40000
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
1992 19931994 19951996 19971998 19992000 20012002 20032004 2005
Year Before Death
Part
AB
Spen
ding
(200
8 $)
Source: 1992-2008 MCBS Cost and Use files. Decedents only.
21
Remaining Issues Next steps
Separate analysis by types of service – will allow unequal number of enrollees for A & B services. In this preliminary analysis Parts A & B enrollees are assumed equal.
Under 65-year olds?
The endogeneity of TTD distributions Per capita health spending growth will impact
future TTD distributions SSA projections may have underestimated the
negative impact, resulting in overly optimistic projections of future mortality improvement
22
What Kills Us
Source: Death in the US, 2010. NCHS Data Brief, June 2012