Health spending for elderly shows lowest growth rate among all age groups

Liz Seegert

About Liz Seegert

Liz Seegert (@lseegert), is AHCJ’s topic editor on aging. Her work has appeared in NextAvenue.com, Journal of Active Aging, Cancer Today, Kaiser Health News, the Connecticut Health I-Team and other outlets. She is a senior fellow at the Center for Health Policy and Media Engagement at George Washington University and co-produces the HealthCetera podcast.

Per capita health care costs for people age 65 and older grew by just 4.1 percent for 2002-10, the lowest among any age groups for that period, according to a new report by CMS’s Office of the Actuary. The report, published in the current issue of Health Affairs, examines aggregate and per-capita health spending by gender and major age groups. (Note: AHCJ members get free access to Health Affairs.)

In comparison, spending for children grew at the fastest rate (5.5 percent) and per person spending for individuals aged 19–64 increased 5.2 percent annually.

Estimates of health spending by age and gender consist of all the medical goods and services used to treat or prevent a specific disease or condition in a specific person – including hospital care, physician and clinical services, retail prescription drugs, and the programs and payers for that care, such as private health insurance, Medicare, Medicaid.

While the authors discuss the impact of the recession on health spending for various age groups, its effect on the elderly was not as clear. Per capita spending growth for this group in 2008–10 averaged just 2.4 percent annually, lower than growth for the other age groups. Slower Medicare spending and continued slow growth in spending for nursing care facilities and continuing care retirement communities contributed to the low rate of growth. Also, private health insurance spending per enrollee for those ages sixty-five and older grew slowly, at 3 percent annually over the period – the slowest growth rate of private health insurance among the major age groups. Out-of-pocket spending per person for the elderly declined 0.4 percent annually over this period.

However, despite the lower growth rate, per capita health spending among the elderly was still about three times higher than for working adults (18,424 vs $6,125) and five times that of children ($3,628). Those age 65 and older accounted for more than one-third (34 percent, or $744 billion) of all health care spending in 2010, although comprised only 13 percent of the US population.

Additionally, retail prescription drug spending paid by Medicare for the working-age population also increased, from 1 percent in 2004 to 12 percent in 2010 according to the analysis. This is because drug coverage for working-age disabled beneficiaries who were dually eligible for Medicaid and Medicare was transferred from Medicaid to Medicare. Medicaid’s share of drug spending for the working-age population fell from 16 percent in 2004 to about 8 percent in 2010.

Data tables, sources and methods, are available on the CMS website.

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