Medicare Spending Growth for Dual-Eligible Beneficiaries Has Trended Down Since 2011

The Issue

Individuals who qualify for both Medicare and Medicaid benefits — known as dual-eligible beneficiaries, or duals — make up a disproportionately high share of Medicare spending. While just 20 percent of all Medicare beneficiaries, they account for 34 percent of all spending by the program. Experts attribute this to these individuals’ often-complex health needs, as well as poor policy alignment between Medicare and Medicaid.

While duals’ high level of Medicare spending is well established, less is known about how this spending has grown over time. With support from the Commonwealth Fund, researchers writing in Health Affairs (August 2018) compared rates of Medicare spending growth between duals and Medicare-only beneficiaries. The study covered the period from 2007 to 2015, with the analyses adjusted for Medicare payment rate increases over this period.

What the Study Found

• Overall Medicare spending for dual-eligible beneficiaries was consistently higher than it was for Medicare-only beneficiaries, but spending grew more slowly for dual-eligible beneficiaries at the end of the study period.
• In 2013, annual spending growth rates for duals age 65 and older dropped below those of Medicare-only beneficiaries and remained lower through 2015.
• Long-term nursing home patients had some of the highest Medicare spending growth rates, regardless of their age or Medicaid eligibility.
• Duals age 65 and older maintained fairly consistent spending growth rates with increasing age. But among Medicare-only beneficiaries, spending growth accelerated after age 65.

The Big Picture

The relatively lower recent rates of spending growth for duals is somewhat reassuring. Although these beneficiaries incur high costs, the spending gap between them and other Medicare beneficiaries does not appear to be widening. However, the researchers observed a greater decline in inpatient hospital spending for Medicare-only beneficiaries than for duals. This raises questions about whether reforms to how Medicare pays providers — linking payments to the value and quality of care provided — are as effective at controlling costs for duals. Additional reforms may need to focus on long-term nursing home patients, who had both high levels of spending and high spending growth.

The Bottom Line

In recent years, Medicare spending for dual-eligible beneficiaries has not grown faster than spending for Medicare-only beneficiaries.