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The Concentration of Medical Spending: An Update

In: Themes in the Economics of Aging

  • David M. Cutler
  • Ellen Meara

In the last two decades, Medicare spending has doubled in real terms despite the fact that the health of Medicare beneficiaries improved over this period. The goals of this paper are to document how trends in spending by age have changed among elderly Medicare beneficiaries in the last decade and to reconcile the decline in disability rates with rapid increases in spending among the elderly. First, we conclude that the trend of disproportionate spending growth among the oldest old has continued between 1985 and 1995. Spending among the younger elderly, those 65-69 rose by two percent annually in real per person terms. In contrast, spending for those over age 85 rose by four percent. Second we show that the reasons for the large increase in spending on the oldest elderly relative to the younger elderly is the rapid increase in the use of post-acute services such as home health care and skilled nursing care. Spending on post-acute care for the very old has risen 20 percent per year in the last decade.

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This chapter was published in:
  • David A. Wise, 2001. "Themes in the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise01-1, August.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10328.
    Handle: RePEc:nbr:nberch:10328
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
    Phone: 617-868-3900
    Web page: http://www.nber.org
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    1. David M. Cutler, 1998. "Cost Shifting or Cost Cutting? The Incidence of Reductions in Medicare Payments," NBER Chapters, in: Tax Policy and the Economy, Volume 12, pages 1-28 National Bureau of Economic Research, Inc.
    2. David M. Cutler & Ellen Meara, 1997. "The Medical Costs of The Young and Old: A Forty Year Perspective," NBER Working Papers 6114, National Bureau of Economic Research, Inc.
    3. David M. Cutler & Louise Sheiner, 1999. "Demographics and medical care spending: standard and non-standard effects," Finance and Economics Discussion Series 1999-20, Board of Governors of the Federal Reserve System (U.S.).
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