Medicare Spending Peaks for Beneficiaries in their Mid-90s
January 16, 2015 04:23 PM
A new study in the journal Health Affairs found that Medicare per capita spending for beneficiaries with traditional Medicare over age 65 peaks among beneficiaries in their mid-90s and then declines. The study also found that spending varies by type of service with advancing age. Between 2000 and 2011 the peak age for Medicare per capita spending increased from 92 to 96. In contrast, among decedents, Medicare per capita spending declines with age.
According to the study, conducted by Patricia Neuman, Juliette Cubanski and Anthony Damico:
“As the US population ages and more people on Medicare live into their 80s, 90s, and beyond, analysts and policy makers are examining the impact of these trends on the federal budget and the Medicare program. At the same time, geriatricians and other providers who care for older patients are paying greater attention to the question of how best to meet the needs of an aging population.
By 2050 the number of people on Medicare ages 80 and older will nearly triple; the number of people in their 90s and 100s will quadruple. To inform discussions about Medicare’s role in providing coverage for an aging population and to assess the relationship between Medicare spending and advancing age, this…analysis of Medicare per capita spending among beneficiaries over age 65 in traditional Medicare, by age and type
Below is a synopsis of the study’s key findings from Health Affairs:
“Per Capita Spending By Age. In 2011 Medicare per capita spending increased with age. Spending peaked at age 96 and then declined gradually for the relatively small number of older beneficiaries. Average Medicare per capita spending for beneficiaries age 96 ($16,145) was more than double that for beneficiaries age 70 ($7,566). This spending pattern persisted even when we excluded decedents from the analysis:
Among beneficiaries who lived a full year in 2011, Medicare per capita spending also increased with age and peaked at age 96 ($14,278)
Since 2000, the age at which Medicare per capita spending has peaked has increased, from 92 in 2000 to 96 in 2011. The amount of Medicare per capita spending at the peak age has also increased, from $9,557 in 2000 (adjusted for inflation) to $15,015 in 2011 if Part D is excluded, and to $16,145 including Part D (trend data not
Share Of Beneficiaries And Share Of Spending. Medicare beneficiaries ages 80 and older accounted for a disproportionate share of traditional Medicare spending. In 2011 people in this age group accounted for 24 percent of beneficiaries in traditional Medicare but 33 percent of traditional Medicare spending. In contrast, people ages 65–69 accounted for 26 percent of traditional Medicare beneficiaries but just 15 percent of spending.
Per Capita Spending By Service. The relatively high per capita spending among beneficiaries in their mid-to-late 90s in 2011 was influenced by
spending on skilled nursing facility, hospice, and (to a lesser extent) home health services.
When we excluded spending on these services, we found that per capita spending peaked at age 89.
Medicare per capita spending for inpatient care in 2011 plateaued between the ages of 84 and 97, peaking at age 89, before declining. For Part B provider, services, and supplies and hospital outpatient services, per capita
spending peaked earlier, at age 83, before declining. In contrast, per capita spending for skilled nursing facility and hospice services increased dramatically at older ages. A larger share of older beneficiaries used these services, and older users had higher per capita spending on them.
Despite a gradual reduction in Medicare per capita spending for Part B providers, services, and supplies for beneficiaries beginning in their mid-to-late 80s, per capita spending continues to climb into the mid-90s as a result of persistent levels of inpatient hospital spending and a sharp rise in skilled nursing facility and hospice spending in the late 80s and 90s. Between ages 86 and 96, Medicare per capita spending on skilled nursing facility services increased by more than 50 percent (from $2,043 to $3,149) while per
capita spending on hospice tripled (from $706 to $2,299).
In percentage terms, as beneficiaries age, a larger share of Medicare per capita spending was devoted to skilled nursing facility and hospice services and a smaller share to Part B providers and prescription drugs
Spending on inpatient hospital services was a relatively constant share of per capita spending until beneficiaries reached their late 90s.
Spending On Decedents. Spending on decedents affected our estimates of Medicare per capita spending by age. However, the age-related spending increase was not entirely attributable to end-of-life care or to higher death rates among older beneficiaries. The pattern of Medicare per capita spending by age was similar with or without decedents in our analysis, although average spending was higher at all ages when decedents were included. This is because average Medicare per capita spending was significantly greater for decedents than for those who lived the entire year, both overall—$33,486 versus $8,647 - and at every age. Because of higher death rates among older beneficiaries, average per capita spending among beneficiaries who died at older ages exerted a greater influence on estimates of average Medicare spending among older beneficiaries.
In contrast to the pattern of Medicare per capita spending observed generally, per capita spending on decedents in traditional Medicare declined steadily with age. In 2011 per capita spending declined from about $43,000 for decedents age 70 to about $20,000 for centenarians who died. The change was largely attributable to a reduction in inpatient spending.
To read the full report, pleaser click here.