Medicaid/Medicare Medicare Medicare Advantage

Medicare, adverse selection and cancer

Conventional wisdom holds that Medicare Advantage provides better service and lower cost sharing than traditional Medicare fee-for-service, and thus is attractive for many people.  However, Medicare Advantage may restrict access to providers and may be less attractive to patients with more severe illnesses.  Healthcare economists, however, do not rely on rumors and stories to make conclusions, we rely on data!

And the results from data analysis is exactly what we have from Lissenden (2018), who looks at Medicare beneficiaries recently diagnosed with cancer:

I estimate that a cancer diagnosis increases the probability a patient will leave a private Medicare plan, for the public plan, by 0.8% points (41%). Similarly, a cancer diagnosis decreases the probability a patient will leave the public Medicare plan, for a private plan, by 0.5% points (16%). The implication is that private Medicare plans are relatively less attractive to cancer patients than they are to noncancer patients.

This study does not look at all serious illnesses, but is one data point that suggests that conventional wisdom may not be totally incorrect.



  1. Has anyone done a review article to gather all the estimates of the impact of adverse selection in the health insurance market? While this *might* be evidence of adverse selection, this seems like an exceedingly small impact. I know there have been other studies that document a type of death spiral effect from adverse selection in the presence of multiple plans. If this is indeed anything more than noise, one question that would be important to answer is what makes the Medicare situation more robust against adverse selection.

  2. If these stats are true, then it adds up to yet another complaint in the long list of grievances that people have with Medicare. Many doctors are refusing to treat patients with Medicare today. Though the Medicare officials suggest that the percentage of these doctors is extremely small, the patients tell otherwise.

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