Impact of Medicare Advantage Expansion on End-Stage Renal Disease: Premiums and Market Dynamics

• In Event: Expanding Coverage, Ensuring Access: Challenges in Public Insurance

Abstract

Research Objective: To evaluate the economic and healthcare impacts of the 21st Century Cures Act, which expanded Medicare Advantage (MA) eligibility to individuals with end-stage renal disease (ESRD) in 2021. This policy change led to a rapid increase in MA enrollment among ESRD patients, rising from 25% to 40% within a year. Given that ESRD patients represent only 1% of Medicare enrollees but account for 7% of Medicare's fee-for-service expenses, this shift can have significant impacts on MA plan premiums, benefits, and access to care. These changes may exacerbate existing disparities in access to high-quality care, particularly among Black and Hispanic beneficiaries, who are disproportionately enrolled in MA plans. The aim of this study is to analyze the effects of this policy change on MA plan premiums, benefits, and care quality across counties with varying ESRD incidence rates, and to examine how these impacts differ by racial and ethnic groups and healthcare market characteristics.

Study Design: This study employs a difference-in-differences (DiD) approach to assess variations in ESRD incidence rates and the impact on the MA plan premiums and benefits. The core hypothesis is that "highly-exposed" counties, those with a high incidence of ESRD, will see significant increases in MA premiums and bids due to the influx of ESRD enrollees post-2021. We also extend our DiD analysis to explore how competition among dialysis facilities influences MA premium changes following the policy implementation, considering the market's concentration and the predominance of two major dialysis providers. Outcomes of interest include MA plan premiums, bides, and benefits at the county level. We cluster standard errors at the state-county level and control for facility and county characteristics.

Population Studied: We examined approximately 7,000 dialysis facilities across 2,953 counties in all 50 states and the District of Columbia, totaling about 15,000 county-years from 2018 to 2022. 

Principal Findings: Preliminary analysis indicates that post-policy, highly exposed counties experienced a 27% increase in MA premiums compared to lowly exposed counties (95% CI, 0.60-1.79), suggesting that the influx of high-cost ESRD patients into MA plans has driven up premiums. These findings indicate significant financial pressures on MA plans in regions with higher ESRD incidence.

Conclusions: The expansion of MA eligibility under the 21st Century Cures Act has substantial economic implications, particularly in counties with high ESRD incidence. Premium increases suggest that policy changes may exacerbate financial challenges for MA plans, potentially affecting affordability and quality of care for the general population and vulnerable groups, including Black and Hispanic beneficiaries.

Implications for Policy or Practice: Policymakers should consider strategies to mitigate the financial burden on MA plans in high-ESRD-incidence areas, such as providing targeted subsidies or adjusting risk adjustment formulas. Further analysis of dialysis facility market dynamics and their effects on costs and care quality is essential to inform future policy adjustments.

Authors

• Sih-Ting Cai, Indiana University
  Presenting Author

• Grace Ann McCormack, University of Southern California
  Non-Presenting Co-Author

• Hansoo Ko, George Mason University
  Non-Presenting Co-Author