Panel Paper:
The Role of Chronic Conditions in the Medicare Fee-for-Service Spending Growth Slowdown
*Names in bold indicate Presenter
Policymakers highlighting unsustainable spending growth often cite the decades during which Medicare spending growth exceeded GDP growth by over 2%. Recently, Medicare spending growth has slowed dramatically, which has led researchers to investigate the sources of the slowdown and whether it is likely to be sustained. We investigate how the change in the health status of the Medicare population and influx of new younger beneficiaries contribute to the Medicare spending growth slowdown.
Analysis Plan: We examine the role in which the changing health status (specifically diagnosed chronic conditions), demographics, and payment rates have on Medicare spending growth. We decompose spending growth and trends in growth into the portions explained by the change in both the number and type of chronic conditions and those explained by other factors, acknowledging potential interactions between factors. Finally, by defining changes in Medicare spending through the lens of chronic conditions, we show that certain types of patients and care patterns that have experienced lower cost growth.
Population Studied: We use the Medicare Beneficiary Summary File from 2007-2013 for individuals enrolled in Medicare FFS. Individuals who are only enrolled in Medicare Part A or in a Managed Care plan are not included in the population.
Principal Findings:
Preliminary adjusted results show that a change in the chronic conditions profile of enrolled beneficiaries contributed to 26% of the of the Medicare spending growth slowdown. Our decomposition shows that this varied by condition: for example, increased prevalence of Cognitive and Endocrine/Renal conditions account for $302 in per-beneficiary spending increases, however, decreased prevalence of Cardiovascular conditions led to an expected savings of $150.55 per beneficiary.
Conclusion: Recent Medicare spending growth slowdown occurred across regions and service sectors. We find that payment rate, changes, changes in the prevalence of chronic conditions, and changes in the cost per treated condition all contributed to the slowdown. Additional analyses will explore the impact of more efficient chronic condition care on spending growth slowdown.
Implications for Policy: Understanding the factors contributing to the slowdown in Medicare spending provides more information to policymakers seeking to control long term Medicare spending changes.
