Examining Measures of Income and Poverty in Medicare Administrative Data

Disparities by economic status are observed in the health status and health outcomes of Medicare beneficiaries. For health services and health policy researchers, one barrier to addressing these disparities is the ability to use Medicare data to ascertain information about an individual’s income level or poverty, because Medicare administrative data contains limited information about individual economic status. Information gleaned from other sources—such as the Medicaid and Supplemental Security Income programs—can be used in some cases to approximate the income of Medicare beneficiaries. However, such information is limited in its availability and applicability to all beneficiaries. Neighborhood-level measures of income can be used to infer individual-level income, but level of neighborhood aggregation impacts accuracy and usability of the data. Community-level composite measures of economic status have been shown to be associated with health and health outcomes of Medicare beneficiaries and may capture neighborhood effects that are separate from individual effects, but are not readily available in Medicare data and do not serve to replace information about individual economic status. There is no single best method of obtaining income data from Medicare files, but understanding strengths and limitations of different approaches to identifying economic status will help researchers choose the best method for their particular purpose, and help policymakers interpret studies using measures of income.