Low Income Subsidy (Lis): An Evaluation Of Expenditure, Utilization And Health Care Outcomes

Abstract

BACKGROUND: This study focuses on the Low Income Subsidy (LIS) of the Medicare Part D program. LIS is a federal program which provides government subsidized prescription drug coverage for Medicare beneficiaries in order to reduce or eliminate low- income enrollees' out-of-pocket expenses associated with prescription drugs. A plethora of studies have been conducted on the effect of insurance on health care utilization and the corresponding effect on health and health outcomes. Within the Medicare Part D population, a myriad of studies have shown conflicting results regarding the effects of subsidized cost-sharing on expenditure, utilization and health outcomes. Results from studies specifically comparing deemed vs. non-deemed LIS beneficiaries' expenditure, utilization and health outcomes have been equivocal. OBJECTIVE: To evaluate the impact of subsides on expenditures, medication and health care utilization and health outcomes between LIS groups. METHODS: Using 5% Medicare administrative sample, interrupted time series (differences-in-differences) regression models were developed to evaluate the impact of LIS enrollment (subsidy amount) between LIS groups and estimate changes in utilization and expenditures and for beneficiaries who switched LIS status between 2009 and 2010. RESULTS: The results from this study showed that beneficiaries with no subsidy had significantly higher total health services utilization and expenditure, compared to beneficiaries with no subsidy. However, for beneficiaries who switched LIS status, the effect of LIS on health services utilization was equivocal. For prescription drugs, the results showed a significant increase in medication utilization with increasing subsidy amount (i.e. deemed > non-deemed > non-LIS). Yet, there was virtually no difference in prescription drug expenditures and medication adherence between LIS groups. These results were consistent for beneficiaries who switched LIS status between 2009 and 2010. CONCLUSION: The findings from this study suggests the LIS program, like Part D itself, improves beneficiaries' access to affordable prescription drugs. While there was a positive association between subsidy amount and prescription utilization and expenditure, there was no impact on medication adherence, and the impact of LIS status on health services utilization was equivocal. Essentially, LIS provided no medical spending offsets, consistent with findings in the literature.