Medicare spending increases with age, but end-of-life care is not the sole factor

The questions of how best to care for an aging population and what effect this care will have on the federal budget are increasingly on the forefront of providers’ and policymakers’ minds. A new report from the Kaiser Family Foundation – and a corresponding Health Affairs article – take a look at how Medicare spending patterns change with age, in order to better understand the potential effect the aging population will have on Medicare costs.

The portion of the Medicare population over the age of 80 is expected to triple in the next 35 years and this group already accounts for a disproportionately large share of Medicare spending, according to the study. Medicare spending increases with age and does not currently peak until beneficiaries reach their late 90s on average. As we live longer, the spending peak is also likely to come later; just fifteen years ago the peak spending age was 92, but climbed to 96 by 2011 (the most recent year with available data).


The report suggests that this increase in spending by age is not entirely explained by end-of-life care. When people who passed away in a given year were removed from the analysis, the general pattern of costs increasing with age held true (although, average spending in each age group was higher when they were included). Among people who passed away in 2011, Medicare spending was higher for relatively younger than older people, on average. For example, 70-year-olds who passed away in 2011 spent an average of $43,000, compared to an average of $20,000 for 100-year-olds.

Although overall spending increases with age, somewhat different patterns emerge when breaking spending out into types of care. Inpatient hospital care, for example, peaks when Medicare enrollees are in their late-80s on average, while spending on hospice and skilled nursing peaks much later in life.

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“Medicare per capita spending for inpatient care in 2011 plateaued between the ages of 84 and 97, peaking at age 89, before declining… In contrast, per capita spending for skilled nursing facility and hospice services increased dramatically at older ages. A larger share of older beneficiaries used these services, and older users had higher per capita spending on them.”

Patricia Neuman and colleagues, Health Affairs

While the specific policy implications are beyond the scope of the analysis, their findings raise questions as to whether older Medicare beneficiaries are receiving “the appropriate mix of services and in the most appropriate setting.” The researchers suggest that improving care management for high-cost, older patients – and not just focusing on end-of-life care – will be increasingly salient for both patient care and cost reduction.

The Peterson Center on Healthcare and KFF are partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.

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