Longevity and Medicare Expenditures
Citation: Lubitz, et al. (1995) Longevity and Medicare Expenditures.
Internet Archive Scholar (search for fulltext): Longevity and Medicare Expenditures
Tagged: uw-madison (RSS), wisconsin (RSS), sociology (RSS), demography (RSS), prelim (RSS), qual (RSS), WisconsinDemographyPrelimAugust2009 (RSS)
Summary
Introduction: In the US, the elderly account for over one third of health care spending-and two thirds of this is covered by Medicare. As the proportion of elderly grows and life expectancy continues to increase, the trajectory of Medicare expenditures has become a serious concern. To understand the impact of increasing longevity on Medicare expenditures, Lubitz et al. studied current patterns of Medicare expenditures and applied them to demographic trends. Methods: Data from a sample of 129,166 Medicare beneficiaries who died in 1989 and 1990 were used to assess total Medicare expenditures by age of death. Since Medicare does not cover nursing home costs, which accounts for about 20 percent of health care spending among the elderly, this was not considered in the analyses. Finally, Lubitz et al. used simulation to estimate the lifetime payments for Medicare enrollees who turned 65 in 1990 and those who will turn 65 in 2020. Results: Estimated lifetime Medicare payments (1990 dollars) ranged from 13,044 for persons who died at 65 years of age, to 56,094 for those who died at 80, to 65,633 for those who died at 101 or older. The payments associated with an additional year of life and the average annual payments over an enrollee's lifetime both decreased as the age at death increased. For example, persons who died at 70 incurred an average of 3,571 more in payments over their lifetimes than those who died at age 69; but persons who died at 80 only incurred 1,201 more than those who died at 79. The estimated 7.9 percent increase in life expectancy beyond 65 years that will have taken place between 1990 and 2020 (19.9 years past age 65 in 2020 versus 17.7 years in 1990) was associated with an estimated increase of 2 percent in lifetime Medicare payments. Of the estimated 98 billion increase in total lifetime payments (1990 dollars) from the 1990 group to the 2020 group, 74.3 percent was due to the larger size of the original birth cohort who will reach the age of 65 in 2020, 22.5 percent to an increase in the proportion of that birth cohort projected to survive to 65 years of age, and 3.2 percent to improved life expectancy beyond 65. Conclusions: Increased longevity beyond the age of 65 for future cohorts may not have a very great impact on Medicare spending. Rather, simulations suggest that the bulk of increased spending will be due to the larger size of elderly birth cohorts (e.g., baby boomers). The effect of increased longevity on Medicare expenditures is mitigated by two factors: the decrease seen in payments in the years immediately before death as the age of the beneficiary increases, and the fact that the additional period of any one enrollee's life that is covered consists of relatively low-cost years before the terminal illness.
