Persistence of Medicare Expenditures Among Elderly Beneficiaries

32 Pages Posted: 19 Jul 2000 Last revised: 7 Oct 2010

See all articles by Alan M. Garber

Alan M. Garber

Stanford University - Center for Primary Care and Outcomes Research; Government of the United States of America - Palo Alto Veterans Affairs Medical Center; National Bureau of Economic Research (NBER)

Thomas E. MaCurdy

Stanford University; National Bureau of Economic Research (NBER)

Mark B. McClellan

Brookings Institution; Council of Economic Advisors; National Bureau of Economic Research (NBER)

Date Written: October 1997

Abstract

The highly uneven distribution of Medicare payments among elderly beneficiaries, combined with the predictability of some of the expenditures, poses several challenges to the Medicare program. We present information about the distribution of Medicare expenditures among beneficiaries in specific years, accompanied by new evidence on the extent to which Medicare payments for the care of individual beneficiaries persist over long time periods. Our analysis is based on a longitudinal population of Medicare enrollees during the years from 1987 to 1995. We find that high-cost users accounted for a disproportionate share of the growth of Medicare Part A (hospital) payments during this period, but that an increase in the number of beneficiaries using covered services was largely responsible for the growth of Medicare Part B payments. Few beneficiaries are in the highest-cost categories for multiple years; the high mortality rates of people who use medical services heavily, whether the expenditures occur in one year or repeatedly, limits the extent of expenditure persistence. Even among survivors, it is unusual to remain in the highest-cost categories for multiple years. Nevertheless, individuals with high expenditures in one year are likely to have higher than average expenditures in other years, and expenditures are highly skewed even over a period of nine years. Any policy to reform Medicare will need to accomodate expenditure persistence in order to provide adequate coverage for all beneficiaries.

Suggested Citation

Garber, Alan M. and MaCurdy, Thomas E. and McClellan, Mark B., Persistence of Medicare Expenditures Among Elderly Beneficiaries (October 1997). NBER Working Paper No. w6249. Available at SSRN: https://ssrn.com/abstract=226007

Alan M. Garber (Contact Author)

Stanford University - Center for Primary Care and Outcomes Research ( email )

179 Encina Commons
Stanford, CA 94305-6019
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650-724-5182 (Fax)

Government of the United States of America - Palo Alto Veterans Affairs Medical Center

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United States

National Bureau of Economic Research (NBER)

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Thomas E. MaCurdy

Stanford University ( email )

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Stanford, CA 94305
United States
650-723-3983 (Phone)
650-725-5702 (Fax)

National Bureau of Economic Research (NBER)

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Mark B. McClellan

Brookings Institution ( email )

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United States

Council of Economic Advisors ( email )

Eisenhower Executive Office Building
17th and Pennsylvania Avenue, NW
Washington, DC 20502
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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