Medical Spending of the US Elderly

Abstract

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 per cent of all spenders are responsible for 52 per cent of medical spending in a given year. In addition, those currently * Submitted June 2015. 718Fiscal Studies 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 over 65 per cent 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 US. Policy pointsr Those at the top of the income distribution in the US consume 71 per cent as much health care resources as those at the bottom of the distribution per year.r Those in the last calendar year of life are responsible for 4.9 per cent of total spending. In the last 12 months of life, average medical spending is $59,000, accounting for 16.8 per cent of spending at ages 65 and over and for 6.7 per cent of spending at all ages. Medical spending in the three years before death accounts for 13.4 per cent of aggregate medical spending. r Total spending is on average about $1,100 per year more for women than for men, due to higher expenditures on nursing homes for women.r The financing of health care varies dramatically by income. In the bottom income quintile, Medicare pays $9,500 a year and Medicaid $3,900, while private insurance covers just $900 and out-of-pocket spending is $2,500. In the top income quintile, Medicare pays $6,300 and Medicaid only $300, while private insurance pays $2,400 and out-of-pocket spending is $3,000.r Medical spending is very persistent over time, with those in the top quintile of spending in one year having a 54 per cent chance of being in the top quintile in the next year and a 48 per cent chance of being in the top quintile in two years' time.

Direct and indirect costs of home healthcare in Japan: A cross‐sectional study

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