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Health Spending for the Elderly

By January 21, 2015Commentary

Medicare spending is closely watched as it has become a significant portion of federal spending and is seeing a big uptick in the number of beneficiaries as baby-boomers retire.  Not only are there more beneficiaries, but there are many more older ones, over 80 and even over 90.   (Health Affairs Article)   On a per capita basis for 2011, Medicare spending rises with age, peaking at age 96, then actually declining.  If you are healthy enough to live to age 96, you must not need much health care!!   At age 70 per capita spending is $7566, and at age 96, it is $16,145.  Since some beneficiaries die every year, older beneficiaries are more likely to die, and those people typically have high expenses near the end-of-life, the authors also did an analysis excluding them.  On this basis, per capita spending for those who lived the whole year and were 96 was $14,278, still more than double the spending for full-year survivors who were 70.  The age for peak spending has increased from 92 in 2000 to the current 96.  As in the population as a whole, older cohorts of Medicare beneficiaries account for a disproportionate share of all Medicare spending.  Higher spending for older beneficiaries was driven by more use of home health and nursing home care.  Inpatient and physician services tended to peak in the early or mid-80s and then gradually decline, but home health and nursing care continued to increase with age.  Interestingly, younger decedents had higher costs than did older ones.  It would seem logical that less healthy beneficiaries might die younger.  In many ways, the findings are not overly alarming.  The more interesting look at Medicare spending is to stratify it by individual spending, which shows that a relative few account for a very large percent of even total Medicare spending.

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