Health Care Use and Delivery

Self-reported health status is a strong predictor of health care utilization

According to a recent study led by Arlene S. Bierman, M.D., M.S., of the Agency for Health Care Policy and Research, the response to a single question about general health status strongly predicts a person's subsequent use of health care services. Dr. Bierman and her colleagues from Dartmouth Medical School asked participants in the 1992 Medicare Current Beneficiary Survey to rate their health as excellent, very good, good, fair, or poor. They linked responses with data from the 1993 Medicare Continuous History Survey. According to the researchers, a person's response to the question accurately predicted the use of health care services over the next year.

Results showed that 18 percent of the beneficiaries rated their health as excellent, 56 percent rated their health as very good or good, 17 percent said they were in fair health, and 7 percent rated their health as poor. Medicare expenditures had a marked inverse relation to self-assessed health ratings—those who rated their health the worst spent the most on health care.

In the year after assessment, age- and sex-adjusted annual health care expenditures varied five-fold, from $8,743 for beneficiaries rating their health as poor to $1,656 for those rating their health as excellent. Hospitalization rates followed the same pattern. Those who rated their health as poor had 675 hospitalizations per 1,000 beneficiaries per year compared with 136 per 1,000 for those rating their health as excellent. The investigators found a similar pattern of expenditures and use for other simple, easily obtained measures of health: number of chronic conditions, disability level as reflected by difficulty in performing IADLs and ADLs (instrumental activities of daily living and activities of daily living), and the degree to which health limits social activities.

The Medicare managed care capitation formula reimburses health plans a set amount per beneficiary regardless of the beneficiary's health status. Thus, plans that enroll healthier patients benefit financially, and plans that enroll a disproportionate number of patients in poor health are at a competitive disadvantage. Dr. Bierman and her colleagues conclude that Medicare's current capitation formula unintentionally creates powerful financial incentives for favorable risk selection, and that it penalizes plans which seek to excel in the care of high-risk beneficiaries. They stress the need for health-based payment formulas, as mandated by the 1997 Balanced Budget Amendment, that give plans incentives to develop innovative and efficient models of care and minimize the financial advantages that can be gained through favorable selection. Evaluation will be needed, however, to assure that risk-adjusted payment achieves these goals.

See "How well does a single question about health predict the financial health of Medicare managed care plans?" by Dr. Bierman, Thomas A. Bubolz, Ph.D., Elliott S. Fisher, M.D., M.P.H., and John H. Wasson, M.D., in the March 1999 issue of Effective Clinical Practice 2(2), pp. 56-62. Reprints (AHCPR publication No. 99-R060) are available from the AHCPR Clearinghouse.

Return to Contents
Proceed to Next Article