Trends in medical spending by age, 1963-2000

We combine household surveys and total spending data to analyze trends in medical spending from 1963 to 2000. During this nearly forty-year period, spending grew fastest among the elderly. Per person spending among the elderly grew rapidly from 1963 to 1987, but this trend then reversed during the next decade, reflecting reforms to Medicare's physician and hospital payment systems. Prescription drug spending growth accelerated throughout the time period; it grew fastest among the nonelderly, for whom prescription drug insurance coverage is most extensive.