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

Page 2 The Peter Lamy Center on Drug Therapy and Aging 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 ) individuals, right?

Page 3 The Peter Lamy Center on Drug Therapy and Aging 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

Page 4 The Peter Lamy Center on Drug Therapy and Aging 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

Page 5 The Peter Lamy Center on Drug Therapy and Aging 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

Page 6 The Peter Lamy Center on Drug Therapy and Aging Measures Obesity Body Mass Index (BMI) classes: underweight (<18.5), normal ( ), overweight ( ), obese class I ( ), obese class II ( ), 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

Page 7 The Peter Lamy Center on Drug Therapy and Aging 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

Page 8 The Peter Lamy Center on Drug Therapy and Aging 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

Page 9 The Peter Lamy Center on Drug Therapy and Aging Selected Descriptive Results Obesity among Medicare beneficiaries % in % 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)

Page 10 The Peter Lamy Center on Drug Therapy and Aging Annual Medicare Spending by BMI Class (1997 and 2003)

Page 11 The Peter Lamy Center on Drug Therapy and Aging Annual Prescription Drug Spending by BMI Class (1997 and 2003)

Page 12 The Peter Lamy Center on Drug Therapy and Aging Selected Multivariate Results

Page 13 The Peter Lamy Center on Drug Therapy and Aging Model 1. Unadjusted Marginal Effects of BMI on Medicare and Drug Spending BMI CategoryMedicare SpendingDrug Spending BMI <18.5$2,482 (399)**-$106 (62) BMI 18.5 – 24.9Reference BMI 25.0 – 29.9-$1,056 (150)**$186 (27)** BMI 30.0 – 34.9-$785 (199)**$557 (39)** BMI 35.0 – 39.9$712 (375)$959 (75)** BMI $189 (394)$1,286 (112)** *p <.01 **p <.001

Page 14 The Peter Lamy Center on Drug Therapy and Aging Model 2. Marginal Effects Conditional on Demographic and Economic Factors BMI CategoryMedicare SpendingDrug Spending BMI <18.5$1,628 (351)**-$56 (61) BMI 18.5 – 24.9reference BMI 25.0 – 29.9-$690 (134)**$147 (22)** BMI 30.0 – 34.9-$367 (189)$379 (33)** BMI 35.0 – 39.9$1,062 (353)*$587 (55)** BMI $65 (378)$631 (85)** *p <.01 **p <.001

Page 15 The Peter Lamy Center on Drug Therapy and Aging Model 3. Marginal Effects Conditional on Demographic, Economic, and Morbidity Factors BMI CategoryMedicare SpendingDrug Spending BMI <18.5$614 (252)*-$107 (52) BMI 18.5 – 24.9reference BMI 25.0 – 29.9-$442 (85)**$78 (20)** BMI 30.0 – 34.9-$892 (104)**$152 (28)** BMI 35.0 – 39.9-$986 (154)**$162 (42)** BMI $1,739 (147)**$59 (58) *p <.01 **p <.001

Page 16 The Peter Lamy Center on Drug Therapy and Aging 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.

Page 17 The Peter Lamy Center on Drug Therapy and Aging 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

Page 18 The Peter Lamy Center on Drug Therapy and Aging 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 ( ) - 90% have drug coverage today

Page 19 The Peter Lamy Center on Drug Therapy and Aging 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

Thank You!