Eligibility for the Medicare buy-in programs, based on a survey of income and program participation simulation

Medicare buy-in programs are designed to reduce out-of-pocket expenses of beneficiaries with modest income and assets. This article provides estimates of the size of the Medicare beneficiary population eligible for the Qualified Medicare Beneficiary (QMB) program, the Specified Low-Income Medicare Beneficiary (SLMB) program, and the Qualified Individual-1 (QI-1) program. The buy-in programs use the same resource limits (twice those used in the Supplemental Security Income (SSI) program) but different thresholds for determining income eligibility. The QMB program uses 100 percent of the poverty line as the cutoff, QI-1 covers persons above 120 percent but at or below 135 percent of the poverty line, and the SLMB program is in between. Making informed judgments about the rate of participation in the buy-in programs and the need for outreach requires an accurate estimate of the size of the eligible population. If that population is underestimated, policymakers might come to unduly optimistic conclusions about current buy-in participation. In contrast, an overestimate may make current participation seem too low. If policymakers react to an upwardly biased estimate of the eligible population by increasing outreach, they are bound to be disappointed by the results of that effort. Estimates of the eligible population from past studies of the QMB and SLMB programs range from 5.1 million to 9.1 million. In the absence of new information, it is difficult to judge the accuracy of those estimates because the methodologies had substantial shortcomings that might bias the results. The most common shortcomings include the lack of high-quality, monthly income data and the lack of information on assets from the same data file that was used to estimate participation and income eligibility for Medicare. The current study uses the most recently available (as of August 2000) Survey of Income and Program Participation (SIPP) file that is matched to the Social Security Administration's (SSA's) administrative records. The data file covers 1995 information. Estimates were also obtained using 1991 data to assess the sensitivity of eligibility estimates to the year chosen. The SIPP has several major advantages over other data sources because it contains relevant, high-quality information on both income and assets for establishing financial eligibility for the buy-in programs. First, the SIPP collects detailed and conceptually appropriate information on monthly, rather than annual, income and therefore has more complete information about income than do other surveys. As a result, SIPP-based estimates of poverty are substantially lower than estimates based on the Current Population Survey. Second, the SIPP also collects information on assets at the individual level. Thus, the survey provides enough detail to measure the major income and asset exclusions directly. Finally, the SIPP data are matched to SSA administrative records: Medicare eligibility can therefore be accurately measured, and self-reported data on Social Security and SSI benefits can be replaced with more accurate monthly information. Our 1995 simulation estimates that approximately 4.8 million persons in the U.S. noninstitutionalized population were eligible for the QMB program and an additional 1.6 million for the SLMB program. The total--roughly 6.5 million--is within the range of estimates from past studies but is closer to the lower end, suggesting that the eligible population is smaller than was previously believed. When the estimated QI-1 eligible population of 0.9 million is added, the total for the three buy-in programs is 7.4 million. Because the QI-1 program did not exist in 1995, only the estimated 6.5 million QMBs and SLMBs would actually have been eligible to receive benefits. The 7.4 million figure represents the 1995 Medicare beneficiaries who would be eligible for buy-in under program rules for 2000. Adjusting that number to account for increases in the Medicare population between 1995 and 1999 yields an estimated eligible population of 7.8 million in 1999. Compared with other elderly Medicare recipients, eligible elderly QMBs and SLMBs have poorer health, more functional limitations, and higher rates of health care use. Thus, not only are their income resources relatively limited, but their need for potentially expensive medical care is also greater. Similar differences were not found in health, functional limitations, and health care use among disabled participants in the QMB and SLMB programs. Our estimates imply that about 2.5 million noninstitutionalized individuals were eligible for but not enrolled in the QMB and SLMB programs in 1999. That finding suggests that fewer eligibles may be available for targeting by outreach efforts than was previously believed. Outreach may be more difficult than it would be with a larger eligible population. (ABSTRACT TRUNCATED)