Pent-up Demand Among the Newly Insured

Getting health insurance after being uninsured is generally believed to result in increased health care utilization, although the effect may be ameliorated when there is significant cost-sharing accompanying the insurance.  With the reform law adding many people to the insured roles, the impact of overall health spending is being keenly watched.  The Society of Actuaries has released a report looking at apparent pent-up demand for health care from newly insured persons getting coverage on the Kansas health insurance exchange.   (SOA Report)   Actuaries are very interested in the topic because estimating the use of health services by the newly insured accurately is critical to setting premiums, and we have already seen a number of instances where insurers clearly mis-set those premiums.  The study focused on preference-sensitive treatments, those that could be avoided if the patient were very concerned about cost.  The newly enrolled members through the Kansas exchange tended to be older, more female and more likely to have chronic disease than individuals with continuous coverage.  The authors list three reasons that these newly insured people might use more care–they may have more health needs, they may use services differently because of past care experiences, for example, using the ER, and they may have put off care due to cost concerns.

The study looks largely at the unsatisfied demand driver.  To the extent that this is the reason for higher spending, it is not all bad, once the unmet needs are satisfied, the demand for care should return to a more moderate level.  The preference sensitive care looked at included items such as imagine, minor dermatology needs, musculoskeletal surgeries, upper GI endoscopy and back pain treatment.  There were around 17,000 newly enrolled people and their use was compared with 70,000 continuously insured members.  The analysis indicated that the patients who had just acquired coverage did use much more of this potentially deferred care, up to 50% more, and the cost impact was even higher as the treatments were more expensive, so overall spending on these items was 90% greater than for the comparison group.  The study is limited because it is just one state, one year into the exchanges and a small group of people, but other information, like the recent significant premium increases proposed by many exchange insurers, suggest it is on the right track.  One interpretation of the data is that less healthy people are more likely to enroll for insurance under the reform law, creating a pool with higher costs.  The mandate and subsidies do not appear to adequate to draw healthier people into insurance, and the strengthening economy may also play a role, as younger, potentially healthier people find jobs and get health insurance at work.