Kaiser Study Suggests Need for Managed Care Solutions as Medicare Beneficiaries Age

A new analysis of spending on traditional Medicare from 2001 through 2011 shows that per-person costs rose substantially as people aged. However, not all of this can be explained by the high cost of end-of-life care, and the report’s authors say more must be done to manage the mix of chronic conditions and physical limits that trigger healthcare spending.

As the US population gets older, per-capita Medicare costs now double between age 70 and 95; more critically, the age at which Medicare spending peaks has risen from 92 to 96 since 2000. These trends should set off alarms, according to the report from the Kaiser Family Foundation and a companion article published in Health Affairs; they suggest that without radical change, Medicare will be faced with the soaring costs of caring for more older, sicker people for longer stretches of time.

Parts of the Affordable Care Act (ACA) aimed at changing care delivery and spending patterns may help, including a new rule that pays primary care physicians to manage care for beneficiaries with more than 1 chronic condition. The ACA also includes provisions to prevent unnecessary hospitalizations, to better manage transitions after someone is in the hospital, and to do more to coordinate Medicare and Medicaid benefits for those who get both.

Some key findings in the report, titled “The Rising Cost of Living Longer: Analysis of Medicare Spending by Age for Beneficiaries in Traditional Medicare,” include:

· Beneficiaries age 80 and older made up 24% of the Medicare population in 2011, but they accounted for 33% of the spending.

· Average per capital Medicare spending rose from $7566 at age 70 to $16,145 at age 96 in 2011, with average per capital spending declining after that.

· Between 2010 and 2050, the population age 65 and older will double, from 40 million to 84 million.

· Rising costs for those older than 65 cannot be attributed entirely to end-of-life care. Per capita spending is considerably higher for those who die during the year than those who live through the year: $33,486 compared with $8,647 in 2011. However, higher death rates among the oldest beneficiaries raise the per-capital average for beneficiaries at the older age levels.

· Medicare spending is growing much faster for beneficiaries age 90 or older than for younger beneficiaries, and gap between the cost of caring for the oldest beneficiaries and the youngest is widening.

Data in the report are alarming not only for Medicare, but for all payers, the authors wrote. “Other studies have documented increases in both Medicare and out-of-pocket spending by age, primarily attributable to the cost of long-term services and supports not covered by Medicare.”

As others have, the authors called for more research “to improve the management and coordination of care for high-need, high-cost patients, many of whom are among Medicare’s oldest beneficiaries.” This, they write, “will be essential to meet the needs of an aging population.”