Among dual eligibles, identifying the highest-cost individuals could help in crafting more targeted and effective responses.

The nearly nine million people who receive Medicare and Medicaid benefits, known as dual eligibles, constitute one of the nation's most vulnerable and costly populations. Several initiatives authorized by the Affordable Care Act are intended to improve the health care delivered to dual eligibles and, at the same time, to achieve greater control of spending growth for the two government programs. We examined the 2007 costs and service use associated with dual eligibles. Although the population is indeed costly, we found nearly 40 percent of dual eligibles had lower average per capita spending than non-dual-eligible Medicare beneficiaries. In addition, we found that about 20 percent of dual eligibles accounted for more than 60 percent of combined Medicaid and Medicare spending on the dual-eligible population. But even among these high-cost dual eligibles, we found subgroups. For example, fewer than 1 percent of dual eligibles were in high-cost categories for both Medicare and Medicaid. These findings suggest that decision makers should tailor reform initiatives to account for subpopulations of dual eligibles, their costs, and their service use.