Background: The Medicare Secondary Payer Act (MSPA) requires that employer group health plans serve as the primary payer for individuals with end-stage renal disease (ESRD) for 30 months, with Medicare serving as the secondary payer. After 30 months, Medicare becomes the primary payer. The net fiscal consequences of this policy for the federal government are unknown. Methods: We estimated the net federal fiscal effect of the MSPA for patients receiving dialysis and identified the private-to-Medicare spending ratio (R) at which the policy breaks even, accounting for the forgone tax revenue associated with tax-deductible private health care spending. We conducted an economic evaluation using published data on spending and utilization for ESRD, private-to-Medicare spending ratios for dialysis, dialysis chain financials, and federal tax parameters. Primary outcomes were expressed per privately insured dialysis patient-year, with a national aggregate calculated from incident ESRD counts. Results: At current tax rates, the break-even spending ratio was R < 3. 05. Using central price ratio estimates of R = 2. 99, the MSPA reduced federal outlays by 2, 217 per privately insured dialysis patient-year, or 28 million annually, relative to Medicare being the primary payer for dialysis patients without a coordination period. Ignoring the effect of the MSPA on tax revenue overstated the estimated savings from the MSPA by 4500%. Altering the MSPA so Medicare became the primary payer for dialysis treatments while retaining the coordination period for other services for dialysis patients would have increased federal savings to 29, 981 per privately insured dialysis patient-year, or 378 million annually. Conclusions: Under current prices and tax rates, the MSPA modestly reduced federal spending, while counterfactual policy changes would result in larger savings.
League et al. (2026) studied this question.