Medicare spending and mortality rates of the elderly

This paper addresses the issue of Medicare expenditures and mortality rates of the elderly by examining cross-sectional area data for 1980. Econometric methods are used to determine whether age-, sex-, race-specific mortality rates for elderly population cohorts are lower in areas where Medicare expenditures per beneficiary are higher, controlling for the effects of differences in population and area characteristics. The results show that greater Medicare spending per beneficiary is associated with significantly lower mortality rates. Furthermore, the level of Medicare spending is positively related to the level of public income support for the elderly and the extent of the elderly's contact with hospitals and nursing homes.