Health care spending and service use among high-cost Medicaid beneficiaries, 2002-2004

Using program administrative data, this paper examines spending and service use patterns for the national Medicaid population between 2002 and 2004, with a focus on high-cost beneficiaries. We observed a high degree of spending persistence. 57.9% of those who were among the top 10% of Medicaid spenders in 2002 remained in the top 10% of spenders in the two subsequent years. We identified two distinct subgroups of high spenders--those with persistently high costs and those with episodically high costs-each with different services driving their costs.