DATA BRIEF DECEMBER 2019 The Slowdown in In 2011, the first members of the baby boom generation turned age 65 and began entering the Medicare program in large numbers. Baby boomers started joining Medicare during Medicare Spending a period of historically low growth in traditional Medicare spending per beneficiary. One common misperception is that Medicare per-beneficiary spending growth would not have slowed without this shift toward a younger Medicare population. Growth for Baby By analyzing traditional Medicare spending and enrollment trends by age group from Boomers and Older 2007 to 2015, this data brief demonstrates that beneficiary age was not the main driver of low Medicare spending growth. The slowdown in Medicare per-beneficiary spending Beneficiaries reflects slower spending growth in all age groups, including older beneficiaries. HIGHLIGHTS Changes in Medicare Spending Levels Even though there was a large increase in Medicare beneficiaries ages 65 to 74 when the baby boomers began entering Medicare, this age shift does not explain why Medicare and Growth by Age Group, 2007–2015 spending per beneficiary has grown so little in recent years. Across all Medicare age groups, even the oldest beneficiaries, annual Medicare per- beneficiary spending growth was low from 2007 to 2015. Laura M. Keohane Assistant Professor the Medicare age distribution had not changed during this time, the Medicare If Department of Health Policy program would have still experienced lower spending growth. Vanderbilt University School of Medicine Lucas Stewart Health Policy Analyst Department of Health Policy Vanderbilt University School of Medicine Melinda B. Buntin Mike Curb Professor of Health Policy and Chair of the Department of Health Policy Vanderbilt University School of Medicine The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 2 From 2007 to 2015, the number of beneficiaries ages 65 to 69 increased more than any other age group as baby boomers joined Medicare. From 2007 to 2015, the number of beneficiaries ages 65 to 69 increased more than any other age group as baby boomers joined Medicare. Change in number of Medicare beneficiaries (in millions) by age group, 2007–2015 From 2007 to 2015, the size of the traditional Medicare Change in number of Medicare beneficiaries (in millions) by age group, 2007–2015 population grew by 6.8 percent, 2007 from 37.5 million to 40.0 million 12.0 beneficiaries. This time period 2015 spans the four years prior to the first baby boomer turning age 10.0 65 in 2011 and the subsequent five years. More than 3.3 million 8.0 beneficiaries ages 65 to 74 joined traditional Medicare as the baby boom generation 6.0 began qualifying for Medicare in large numbers. The number of beneficiaries ages 65 to 69 4.0 and ages 70 to 74 increased by 28.9 percent and 10.9 percent, respectively. 2.0 In contrast, most older age groups had small declines in the number of beneficiaries. 0.0 24 and 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 65–69 70–74 75–79 80–84 85–89 90 and For example, the number of younger older beneficiaries ages 80 to 84 decreased by 16.0 percent. The Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015. number of beneficiaries 90 and Laura M. Keohane, Lucas Stewart, and Melinda B. Buntin, The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries: older increased modestly by Changes in Medicare Spending Levels and Growth by Age Group, 2007–2015 (Commonwealth Fund, Dec. 2019). 14.1 percent. Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015. commonwealthfund.org Data Brief, December 2019 The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 3 Even before baby boomers began aging into Medicare, beneficiaries ages 65 to 69 were the largest age group in traditional Medicare. Even before baby boomers began aging into Medicare, beneficiaries ages 65 to 69 were the largest age group in traditional Medicare. Medicare population, share of beneficiaries by age group (%), 2007–2015 Medicare beneficiaries ages 65 to 69 represented 23.8 percent Medicare population, share of beneficiaries by age group (%), 2007–2015 of beneficiaries in 2007. After 2007 the baby boomers began joining 30 28.8 Medicare, this percentage 2015 increased to 28.8 percent. 23.8 By 2015, beneficiaries ages 75 to 89 comprised 30.2 percent of the traditional Medicare 20 population, down from 35.6 percent in 2007. The proportion of traditional Medicare beneficiaries younger 10 than age 65 remained relatively stable (17.2% in 2015 compared with 17.8% in 2007). These estimates do not include Medicare Advantage enrollees. 0 According to the Centers 54 and 55–64 65–69 70–74 75–79 80–84 85–89 90 and for Medicare and Medicaid younger older Services, the number of Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015. Medicare Advantage enrollees doubled from 8.4 million to 16.8 Laura M. Keohane, Lucas Stewart, and Melinda B. Buntin, The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries: Changes in Medicare Spending Levels and Growth by Age Group, 2007–2015 (Commonwealth Fund, Dec. 2019). million from 2007 to 2015. Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015. commonwealthfund.org Data Brief, December 2019 The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 4 The increased number of younger Medicare beneficiaries only slightly lowered how much Medicare spends on average per beneficiary. The increased number of younger Medicare beneficiaries only slightly lowered how much Medicare spends on average per beneficiary. Annual Medicare spending levels per beneficiary with and without adjusting for changes Across the traditional in age distribution ($), 2007–2015 Medicare population, average Annual Medicare spending levels per beneficiary with and without spending levels changed from adjusting for changes in age distribution ($), 2007–2015 $8,829 per beneficiary in 2007 12,500 to $8,794 per beneficiary in 2015. These figures, and all the spending numbers reported in Adjusted for age distribution changes this brief, reflect adjustments 10,000 for changes in Medicare payment rates over time. Not adjusted for age distribution changes If the age distribution of the 7,500 Medicare population had remained the same from 2007 to 2015, Medicare spending 5,000 levels would have been slightly higher in later years than what was observed with 2,500 the influx of baby boomers. After accounting for shifts in the age distribution, the 0 2015 age-adjusted spending 2007 2008 2009 2010 2011 2012 2013 2014 2015 per traditional Medicare Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015, and information on was $9,414, which beneficiary annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending levels adjusted to reflect payment rates in effect in 2015. is 7 percent greater than actual Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Medicare Spending Growth for Baby Boomers and Older Beneficiaries: Laura M. Keohane, Lucas Stewart, and Melinda B. Buntin, The Slowdown in Use segment for all traditional Medicare beneficiaries, spending levels without any Changes in Medicare Spending Levels and Growth by Age Group, 2007–2015 (Commonwealth Fund, Dec. 2019). 2007–2015, and information on annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending levels adjustment for age ($8,794). adjusted to reflect payment rates in effect in 2015. commonwealthfund.org Data Brief, December 2019 The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 5 Even if the age distribution of the Medicare population had remained the same, annual growth in Medicare spending per beneficiary would have been low. Even if the age distribution of the Medicare population had remained the same, annual growth in Medicare spending per beneficiary would have been low. Annual growth in Medicare spending per beneficiary with and without adjusting for changes Before adjusting for changes in in age distribution (%), 2007–2015 the Medicare population’s age Annual growth in Medicare spending per beneficiary with and without adjusting for distribution, the average annual changes in age distribution (%), 2007–2015 growth rate of spending per beneficiary was –0.04 percent 6 from 2007 to 2015. (Like all spending estimates reported in this brief, these estimates reflect Medicare spending after 4 adjustment to 2015 Medicare payment rates.) After accounting for the shift 2 toward a younger Medicare population, spending per Adjusted for age distribution changes beneficiary grew by 0.8 percent on average from 2007 to 2015. 0 This rate of growth is slightly greater than the –0.04 percent unadjusted average annual rate -2 of growth. Whether or not spending Not adjusted for age distribution changes growth is adjusted for shifts in -4 age distribution, many years 2007 2008 2009 2010 2011 2012 2013 2014 2015 during this period had spending growth that was minimal (close Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015. and information on annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending growth rates adjusted to reflect annual payment rate changes. 0%) or negative (below 0%, to indicating that spending levels Laura M. Keohane, Lucas Stewart, and Melinda B. Buntin, The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries: Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, declined). Changes in Medicare Spending Levels and Growth by Age Group, 2007–2015 (Commonwealth Fund, Dec. 2019). 2007–2015. and information on annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending growth rates adjusted to reflect annual payment rate changes. commonwealthfund.org Data Brief, December 2019 The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 6 Across most older groups, average Medicare spending levels per beneficiary changed little from 2007 to 2015. Across most older groups, average Medicare spending levels per beneficiary changed little from 2007 to 2015. Change in average Medicare spending per beneficiary by age group ($), 2007–2015 Most groups ages 65 to 84 had almost no change in Change in average Medicare spending per beneficiary by age group ($), 2007–2015 per-beneficiary spending 2007 levels from 2007 to 2015. After 15,000 2015 adjusting for payment rate changes, spending levels per 12,500 beneficiary declined slightly (by 3.7%), from $5,275 to $5,081 per beneficiary for those ages 10,000 65 to 69, and from $7,824 to $7,818 per beneficiary for those ages 70 to 74. 7,500 In contrast, the oldest Medicare beneficiaries had slightly larger 5,000 net increases in spending levels. Among beneficiaries age 90 and older, spending per beneficiary 2,500 increased by 10.0 percent from $12,948 in 2007 to $14,244 in 0 2015. 65–69 70–74 75–79 80–84 85–89 90 and older Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015, and information on annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending levels adjusted to reflect payment rates in effect in 2015. Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost andMedicare Spending Growth for Baby Boomers and Older Beneficiaries: Laura M. Keohane, Lucas Stewart, and Melinda B. Buntin, The Slowdown in Use segment for all traditional Medicare beneficiaries, 2007–2015, and information on annual payment rate changes from the Federal Register and the 2007–2015Medicare and Medicaid Dec. 2019). Changes in Medicare Spending Levels and Growth by Age Group, Centers for (Commonwealth Fund, Services. Spending levels adjusted to reflect payment rates in effect in 2015. commonwealthfund.org Data Brief, December 2019 The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 7 Average Medicare spending levels per beneficiary increased from 2007 to 2015 for most age groups of Medicare beneficiaries who qualify because of disability. Average Medicare spending levels per beneficiary increased from 2007 to 2015 for most age groups of Medicare beneficiaries who qualify because of disability. Change in average Medicare spending per beneficiary by age group ($), 2007–2015 Almost all age groups among traditional beneficiaries Change in average Medicare spending per beneficiary by age group ($), 2007–2015 younger than age 65 had 2007 increases in Medicare spending 15,000 2015 levels from 2007 to 2015. Net changes in spending levels 12,500 during this time period ranged from 4.8 percent to 16.6 percent for those ages 30 to 64. 10,000 7,500 5,000 2,500 0 24 and 25–29 30–34 35–39 40–44 45–49 50–54 55–59 60–64 younger Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015, and information on annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending levels adjusted to reflect payment rates in effect in 2015. Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost andMedicare Spending Growth for Baby Boomers and Older Beneficiaries: Laura M. Keohane, Lucas Stewart, and Melinda B. Buntin, The Slowdown in Use segment for all traditional Medicare beneficiaries, 2007–2015, and information on annual payment rate changes from the Federal Register and the 2007–2015Medicare and Medicaid Dec. 2019). Changes in Medicare Spending Levels and Growth by Age Group, Centers for (Commonwealth Fund, Services. Spending levels adjusted to reflect payment rates in effect in 2015. commonwealthfund.org Data Brief, December 2019 The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 8 All age groups of older Medicare beneficiaries had similar patterns of declining or low annual growth in spending per beneficiary from 2007 to 2015. All age groups of older Medicare beneficiaries had similar patterns of declining or low annual growth in spending per beneficiary from 2007 to 2015. Annual growth in Medicare spending per beneficiary by age group (%), 2007–2015 For most age groups, annual spending growth rates declined Annual growth in Medicare spending per beneficiary by age group (%), 2007–2015 every year from 2007 to 2012, 65–69 70–74 75–79 followed by increasing spending 5 growth rates from 2013 to 2015. 2.5 The timing of when spending growth rates began to decline 0 varied by age group. Unlike -2.5 older beneficiaries, those ages 65 to 79 had modest increases -5 in 2009 spending growth. In 2007 2015 2007 2015 2007 2015 contrast, 2009 marked the first year of declining spending 5 80–84 85–89 90 and older growth for beneficiaries 80 and older during this time period. 2.5 0 -2.5 -5 2007 2015 2007 2015 2007 2015 Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015, and information on annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending growth rates adjusted to reflect annual payment rate changes. Laura M. Keohane, Lucas Stewart, and Melinda B. Buntin, The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries: Changes in Medicare Spending Levels and Growth by Age Group, 2007–2015 (Commonwealth Fund, Dec. 2019). Data: Authors’ calculations using data from the Medicare Master Beneficiary Summary File and its Cost and Use segment for all traditional Medicare beneficiaries, 2007–2015, and information on annual payment rate changes from the Federal Register and the Centers for Medicare and Medicaid Services. Spending growth rates adjusted to reflect annual payment rate changes. commonwealthfund.org Data Brief, December 2019 The Slowdown in Medicare Spending Growth for Baby Boomers and Older Beneficiaries 9 CONCLUSION ABOUT THE AUTHORS With the aging of the baby boomer population, the Medicare program Laura M. Keohane, Ph.D., M.S., is an assistant professor in the experienced a large increase in the proportion of beneficiaries ages Department of Health Policy at Vanderbilt University School of Medicine. 65 to 74. This shift toward a younger Medicare population, however, She investigates health policy issues related to aging and disability with a focus on dual-eligible beneficiaries, postacute care services, and explains very little of why Medicare per-beneficiary spending growth long-term services and supports. Dr. Keohane holds a Ph.D. in health was low from 2007 to 2015. Across all Medicare age groups — even services research from Brown University and an M.S. in health policy and the oldest beneficiaries — annual Medicare per-beneficiary spending management from the Harvard T.H. Chan School of Public Health. growth was low during this period. If the Medicare age distribution had not changed during this time period, the Medicare program still Lucas Stewart is a former health policy analyst in the Department of would have experienced lower spending growth. Health Policy at Vanderbilt University School of Medicine. He graduated from the University of Tennessee, Knoxville with a degree in economics. Mr. Stewart is currently pursuing a master's degree at the Duke University Sanford School of Public Policy. HOW WE CONDUCTED THIS STUDY Melinda B. Buntin, Ph.D., is the Mike Curb Professor of Health Policy Data sources: Medicare Master Beneficiary Summary File and its associated and chair of the Department of Health Policy at Vanderbilt University Cost and Use segment for the years 2007–2015. This data set provides School of Medicine. Her research interests include health care costs information about each beneficiary’s age and total annual spending. and growth, provider payment systems, and health insurance markets. Buntin previously served as deputy assistant director for health at the Population: Traditional Medicare beneficiaries who were not enrolled in Congressional Budget Office (CBO). Prior to joining CBO, she worked Medicare Advantage as of July in a given calendar year. at the Office of the National Coordinator for Health IT and RAND. Dr. Buntin has a Ph.D. in health policy with a concentration in economics Payment rate adjustment: All spending level and spending growth from Harvard University. measures are adjusted to account for annual changes in Medicare payment rates. In all years, reported spending levels reflect payment rates Editorial support was provided by Christopher Hollander. in effect in 2015. Information on annual payment rate changes is based on notices in the Federal Register and data from the Centers for Medicare ACKNOWLEDGMENTS and Medicaid Services. The authors would like to thank Christine Lai and Alexander Podczerwinski for assistance with data analysis. Age adjustment: To account for the shift in the age distribution of the Medicare population, we estimate what mean overall spending would be For more information about this brief, please contact: Laura M. Keohane, Ph.D., M.S. if the mean spending levels by age group changed over time as observed Assistant Professor in the data, but the proportion of beneficiaries in each age group Department of Health Policy remained the same as in 2007. Vanderbilt University School of Medicine laura.keohanevanderbilt.edu commonwealthfund.org Data Brief, December 2019 About the Commonwealth Fund The mission of the Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, and people of color. Support for this research was provided by the Commonwealth Fund. The views presented here are those of the authors and not necessarily those of the Commonwealth Fund or its directors, officers, or staff.