How Big a Problem is Obesity for the Medicare Program? AcademyHealth June 10, 2008

1. How Big a Problem is Obesity for the Medicare Program? AcademyHealth June 10, 2008 Bruce Stuart, Lirong Zhao, Jennifer Lloyd The Peter Lamy Center Drug Therapy and Aging University of Maryland Baltimore

2. Setup • 25% of Medicare beneficiaries are obese (BMI 30 +) • Obese beneficiaries have higher prevalence of diabetes, hypertension, heart failure, osteoarthritis, and other costly diseases compared to normal weight individuals • They also have significantly more ADL limitations and are far more likely to report being in fair or poor health So…. • It stands to reason that obese beneficiaries will have higher annual Medicare spending compared to normal weight (BMI 18.5 -24.9) individuals, right?

3. Setup However… • This assumes obese beneficiaries receive similar treatment for obesity-related chronic disease compared to normal weight persons with same diseases • Prior research shows that obese people have less access to health services and may be discriminated against by providers

4. Study Objectives • Assess relationship between BMI and spending on traditional Medicare services and prescription drugs • Determine whether spending associated with obesity-related chronic conditions varies across BMI classes • Derive policy implications for the Medicare program and Part D

5. Data and Study Sample Data • Pooled panel of MCBS files, 1997 – 2003 Study Sample • Community-dwelling beneficiaries in the fee-for-service sector, enrolled in Part A and Part B throughout the year, with complete MCBS surveys. • Final study sample: 58,491 person-year observations

6. Measures Obesity • Body Mass Index (BMI) classes: underweight (<18.5), normal (18.5-24.9), overweight (25.0-29.9), obese class I (30.0-34.9), obese class II (35.0-39.9), obese class III (≥40.0) Dependent Variables • Medicare payments for Part A and B services in constant 2006 dollars • Payments for prescription drugs in constant 2006 dollars

7. Measures Explanatory Variables • Age, sex, race, marital status, education, income, drug coverage, region, metro status, health status, ADL limitations, died during year, calendar year of observation • Obesity-related chronic conditions: diabetes, hypertension, CAD, hyperlipidemia, health failure, COPD/asthma, osteoarthritis, hypothyroidism, GERD, sleep apnea

8. Analytic Strategy Descriptive Findings • Chart Medicare and drug spending by BMI class Regression Models • Hierarchical models: (1) BMI dummies (normal weight reference), (2) add demographic and socioeconomic variables, (3) add obesity-related chronic conditions • Pooled cross-sections analysis with person-year as unit of analysis. • Dependent variable modeled as a gamma distribution with log link

9. Selected Descriptive Results • Obesity among Medicare beneficiaries • 16.9% in 1997 • 24.6% in 2003 • Growth rates varied by class of obesity • Class I: 11.7% (1997) to 16.7% (2003) • Class II: 3.5% (1997) 4.9% (2003) • Class III: 1.8% (1997) to 3.1% (2003)

10. Annual Medicare Spending by BMI Class (1997 and 2003)

11. Annual Prescription Drug Spending by BMI Class (1997 and 2003)

12. Selected Multivariate Results

13. Model 1. Unadjusted Marginal Effects of BMI on Medicare and Drug Spending *p <.01 **p <.001

14. Model 2. Marginal Effects Conditional on Demographic and Economic Factors *p <.01 **p <.001

15. Model 3. Marginal Effects Conditional on Demographic, Economic, and Morbidity Factors *p <.01 **p <.001

16. Conclusions • No evidence obese beneficiaries more costly to Medicare over the period 1997 through 2003 (actually somewhat less expensive than normal weight beneficiaries in unadjusted comparisons) • Prescription spending significantly higher for obese beneficiaries, particularly among obese class II and III individuals.

17. Conclusions • Obese beneficiaries receive fewer and/or less costly traditional Medicare services for obesity-related chronic conditions than normal weight beneficiaries • But, obese beneficiaries make somewhat greater use of prescription drugs in treating these conditions

18. Study Limitations • Height and weight are self-reported • Drug use is self-reported. • Study prior to advent of Medicare Part D. • 70% had drug coverage (1997-2003) • 90% have drug coverage today

19. Implications for Medicare • Obesity is a big problem for the Medicare program, but not for the reasons most commonly believed • Rising obesity is unlikely to be a drain on the Medicare Part A and B trust funds • Part D costs will rise as the prevalence of obesity in the Medicare population grows • Conclusion that obese beneficiaries are undertreated for common chronic conditions deserves careful scrutiny

20. Thank You!