Understanding Trends in Medicare Spending, 2007-2014.

OBJECTIVES: To analyze the sources of per-beneficiary Medicare spending growth between 2007 and 2014, including the role of demographic characteristics, attributes of Medicare coverage, and chronic conditions. DATA SOURCES: Individual-level Medicare spending and enrollment data. STUDY
DESIGN: Using an Oaxaca-Blinder decomposition model, we analyzed whether changes in price-standardized, per-beneficiary Medicare Part A and B spending reflected changes in the composition of the Medicare population or changes in relative spending levels per person. DATA EXTRACTION
METHODS: We identified a 5 percent sample of fee-for-service Medicare beneficiaries age 65 and above from years 2007 to 2014.
RESULTS: Mean payment-adjusted Medicare per-beneficiary spending decreased by $180 between the 2007-2010 and 2011-2014 time periods. This decline was almost entirely attributable to lower spending levels for beneficiaries. Notably, declines in marginal spending levels for beneficiaries with chronic conditions were associated with a $175 reduction in per-beneficiary spending. The decline was partially offset by the increasing prevalence of certain chronic diseases. Still, we are unable to attribute a large share of the decline in spending levels to observable beneficiary characteristics or chronic conditions.
CONCLUSIONS: Declines in spending levels for Medicare beneficiaries with chronic conditions suggest that changing patterns of care use may be moderating spending growth. © Health Research and Educational Trust.