The Lifetime Medical Spending of Retirees (original) (raw)

Medical Spending of the U.S. Elderly

2015

We use data from the Medicare Current Beneficiary Survey (MCBS) to document the medical spending of Americans aged 65 and older. We find that medical expenses more than double between ages 70 and 90 and that they are very concentrated: the top 10% of all spenders are responsible for 52% of medical spending in a given year. In addition, those currently experiencing either very low or very high medical expenses are likely to find themselves in the same position in the future. We also find that the poor consume more medical goods and services than the rich and have a much larger share of their expenses covered by the government. Overall, the government pays for 65% of the elderly's medical expenses. Despite this, the expenses that remain after government transfers are even more concentrated among a small group of people. Thus, government health insurance, while potentially very valuable, is far from complete. Finally, while medical expenses before death can be large, on average they constitute only a small fraction of total spending, both in the aggregate and over the life cycle. Hence, medical expenses before death do not appear to be an important driver of the high and increasing medical spending found in the U.S.

Medical Spending and the Health of the Elderly

Health Services Research, 2011

Objective. To estimate the relationship between variations in medical spending and health outcomes of the elderly. Data Sources. [1992][1993][1994][1995][1996][1997][1998][1999][2000][2001][2002] Medicare Current Beneficiary Surveys. Study Design. We used instrumental variable (IV) estimation to identify the relationships between alternative measures of elderly Medicare beneficiaries' medical spending over a 3-year observation period and health status, measured by the Health and Activity Limitation Index (HALex) and survival status at the end of the 3 years. We used the Dartmouth Atlas End-of-Life Expenditure Index defined for hospital referral regions in 1996 as the exogenous identifying variable to construct the IVs for medical spending. Data Collection/Extraction Methods. The analysis sample includes 17,438 elderly (age 464) beneficiaries who entered the Medicare Current Beneficiary Survey in the fall of each year from 1991 to 1999, were not institutionalized at baseline, stayed in feefor-service Medicare for the entire observation period, and survived for at least 2 years. Measures of baseline health were constructed from information obtained in the fall of the year the person entered the survey, and changes in health were from subsequent interviews over the entire observation period. Medicare and total medical spending were constructed from Medicare claims and self-reports of other spending over the entire observation period. Principal Findings. IV estimation results in a positive and statistically significant relationship between medical spending and better health: 10 percent greater medical spending over the prior 3 years (mean 5 U.S.$2,709) is associated with a 1.9 percent larger HALex value (p 5 .045; range 1.2-2.2 percent depending on medical spending measure) and a 1.5 percent greater survival probability (p 5 .039; range 1.2-1.7 percent). Conclusions. On average, greater medical spending is associated with better health status of Medicare beneficiaries, implying that across-the-board reductions in Medicare spending may result in poorer health for some beneficiaries.

Why Do the Elderly Save? The Role of Medical Expenses

Journal of Political Economy, 2010

This paper constructs a rich model of saving for retired single people. Our framework allows for bequest motives and heterogeneity in medical expenses and life expectancies. We estimate the model using AHEAD data and the method of simulated moments. The data show that out-of-pocket medical expenses rise quickly with both age and permanent income. For many elderly people the risk of living long and requiring expensive medical care is a more important driver of old age saving than the desire to leave bequests. Social insurance programs such as Medicaid rationalize the low asset holdings of the poorest. These government programs, however, also benefit the rich because they insure them against their worst nightmares about their very old age: either not being able to afford the medical care that they need, or being left destitute by huge medical bills.

Health Care Expenditure Burdens among Elderly Adults: 1987 and 1996

Medical Care, 2003

OBJECTIVES. Concerns about the health care expenditure burdens of elderly adults underlie the ongoing debate over expanding Medicare benefits and strengthening Medicare؉Choice. We examine burdens for this population using data from the 1987 National Medical Expenditure Survey (NMES) and the 1996 Medical Expenditure Panel Survey (MEPS). METHODS. We estimate how frequently elderly adults live in families whose health expenditures exceed 20% or 40% of their aftertax disposable incomes. Our methodology reduces bias due to errors in income while providing an intuitive measure of exposure to the risk of high burdens. RESULTS. Despite rapid increases in medical care prices, the percentage of elderly adults facing burdens over 20% of disposable income remained essentially constant at 20.9% in 1987 and 22.9% in 1996. The percentage with burdens exceeding 40% of disposable income was 7.3% in 1987 and 7.9% in 1996. High expenditure burdens were more prevalent among elderly adults who were poorer, older, female, higher risk, and covered only by traditional Medicare. Medicaid coverage helped to reduce burdens among the elderly poor, yet incomplete Medicaid take-up in 1996 left approximately 1.3 million elderly adults eligible for Medicaid but covered only by traditional Medicare. CONCLUSIONS. Our results highlight the widespread prevalence of high health care expenditure burdens among elderly adults and the varying extent to which insurance coverage helped to protect them from rising health care expenditures between 1987 and 1996.

Ageing and Health Care Costs

Oxford Research Encyclopedia of Economics and Finance

This is an advance summary of a forthcoming article in the Oxford Research Encyclopedia of Economics and Finance. Please check back later for the full article.There has been a rise in recent research regarding the economics on the consequences of population ageing for health care expenditure. The focus of this research is on expenditures in the last years of life and the implications for the age profile of health care spending. One open issue in the literature is whether health care expenditure is so concentrated in the last years before death that the age profiles in spending will change when longevity increases. The previous literature also finds that the age profile of health expenditures, after controlling for time to death, is dependent on the type of health care expenditure that is being predicted. Some studies find that the age is more powerful in predicting long-term care compared to health care expenditures. However, this result appears to depend on the empirical model used...

AGING OF THE POPULATION AND ITS INFLUENCE TO THE AGGREGATE HEALTH CARE COST IN THE U.S.A

Health care costs consume the largest portion of the gross domestic product (GDP) in the most countries. We tried to find the link between the aging of population and aggregate health care cost. Initially the study assumes that the aging of the population does have a significant relationship with the increases in the total national health care cost. A quantitative research survey with 80 participants was conducted to collect data for analysis. However, the findings of the study suggest that this (contrary to the primary-retrospective research) did not have a significant relationship to the national aggregate health care cost.

The Impact of Aging on Future Healthcare Expenditure

2006

The impact of aging on healthcare expenditure (HCE) has been at the center of a prolonged debate. This paper purports to shed light on several issues. First, it presents new evidence on the relative importance of the two components of HCE that have been distinguished by Zweifel, Felder and Meier (1999), viz. the cost of morbidity and the cost of mortality (their "red herring" hypothesis claims that neglecting the mortality component results in excessive estimates of future growth of HCE). Second, it takes account of recent evidence suggesting that HCE does increase life expectancy, implying that time-to-death is an endogenous determinant of HCE. Third, it investigates the contribution of population aging to the future growth of HCE. For the case of Switzerland, it finds this contribution to be relatively small regardless of whether or not the cost of dying is accounted for, thus qualifying the "red herring" hypothesis.