Per Capita Health Spending for Elderly Grows at Lowest Rate among all Age Groups from 2002-2010, According to a New Report from the CMS Office of the Actuary

In a recent publication from CMS it was announced that the average annual growth in per capita personal health care spending for the elderly was 4.1 percent from 2002 to 2010, the lowest among any other age groups studied, according to a report by the Centers for Medicare & Medicaid Services’ Office of the Actuary released today and published in the journal Health Affairs.

These estimates are a subset of the annually-issued National Health Expenditure (NHE) data, which measures health care spending in the United States. The report examines aggregate and per-capita health spending by gender and major age groups.

Personal health care costs consist of all the medical goods and services used to treat or prevent a specific disease or condition in a specific person. As such, the estimates of health spending by age and gender reflect the types of goods and services delivered including hospital care, physician and clinical services, retail prescription drugs, and the programs and payers for that care, such as private health insurance, Medicare, Medicaid.

Overall, the authors of the report found that growth in spending among groups over this time period varied, especially during the recent recession. For instance, in 2008–10 the largest difference in average spending growth between males and females was for the working-age group (19-64). In this period per capita spending growth for this group was 4.0 percent for males but 2.6 percent for females. A 3.7 percent decline in the birth rate in the period may be one of the causes: Growth in spending for females ages 19–44 slowed as they spent relatively less on maternity care.

However, the impact of the recession on the elderly is less clear. Per capita spending growth for this group in 2008–10 averaged just 2.4 percent annually, which was lower than growth for the other age groups. Slower Medicare spending and continued slow growth in spending for nursing care facilities and continuing care retirement communities contributed to the low rate of growth. Also, private health insurance spending per enrollee for those ages sixty-five and older grew slowly, at 3.0 percent annually over the period—the slowest growth rate of private health insurance among the major age groups. Out-of pocket spending per person for the elderly declined 0.4 percent annually over this period.

Highlights of the report include:

• Spending for children on a per capita basis grew more rapidly between 2002 and 2010 than the other groups; however, aggregate spending for children grew at the slowest rate at 5.7 percent as their share of the U.S. population declined.
• The report also found that personal health care spending for females ($7,860) in 2010 was about 25 percent more than males on a per capita basis, but the gap decreased from a peak disparity of 29 percent in 2004.
• Despite the lower rate of growth among the elderly, per capita spending by the elderly in 2010 ($18,424) continued to be about three times more than the average for working adults ($6,125) and five times more than children ($3,628).

The Affordable Care Act, signed into law in 2010, includes a number of provisions designed to increase access to affordable health insurance coverage and slow the growth of health care costs. Future releases of this biennial series will include the effects on health spending data of provisions such as the requirement for insurers to allow young adults to stay on their parents’ plans until age 26, expanded Medicaid coverage, and the implementation of the Health Insurance Marketplaces.

To read the complete report, visit www.healthaffairs.org.

An online appendix that accompanies the article describes how historical demographic trends are accounted for when analyzing Medicare spending.

To access the data tables and read the sources and methods, visit http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Age-and-Gender.html