Disability and health care spending among medicare beneficiaries

This paper forecasts the impact of changing disability rates on spending by Medicare beneficiaries. We adjust for differential changes in spending by the disabled because the composition of the disabled population and the intensity of their treatment are changing. Among community-dwelling elderly, spending growth among the least disabled grew more quickly than among the most disabled, which offsets some of the cost savings associated with declining disability rates. Using estimates of spending trends by disability category, we project that the cost savings associated with improved disability rates will not dramatically slow Medicare spending in the long run.