Medicare spending on healthcare for elderly dips, driven by better cardiovascular care

Healthcare spending among the Medicare population age 65 and older has slowed dramatically since 2005, and as much as half of that reduction can be attributed to reduced spending on cardiovascular disease, a new Harvard study has found.

Led by Otto Eckstein Professor of Applied Economics David Cutler, a team of researchers showed that by 2012, those reductions saved the average person nearly $3,000 a year. Across the entire elderly population, those savings add up to an impressive $120 billion, with about half of those savings coming from Medicare.

The authors say the findings show that that widespread preventative care has the potential to save money.

IMPACT

Though it might make intuitive sense -- if you can prevent people from falling ill, they'll spend less on healthcare -- the accepted wisdom among economists was exactly the opposite, with the consensus being that prevention saves lives, but not money.

Part of the reason for that is simply numbers. Prevention programs generally have to include huge numbers of people to be effective, Cutler said, which makes them expensive, and there's no guarantee they'll actually work; the authors cited smoking cessation initiatives as an example.

Increases in healthcare spending started slowing in 2005, the study showed, and by 2012 the slowdown was beginning to add up -- to about $2,900 a year per person.

But while the study found that significant cost savings came from improvements in cardiovascular health, the authors said there is still room for more improvement. For example, only half of people diagnosed with high cholesterol have brought it down to guideline levels. Ditto for people with high blood pressure.

Cutler said there's no reason to think this effect would be limited to the elderly, and hopes to expand the study to include younger populations.

THE TREND

National health spending grew 3.9 percent in 2017, almost 1 percent slower than in 2016, according to a study published in December. Medicare spending grew at about the same rate in 2017 as in 2016, while Medicaid spending grew at a slower rate.

This was due to lower Medicaid enrollment growth and a decline in the net cost of insurance for Medicare and Medicaid enrollees in private plans in 2017.
 

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Email the writer: jeff.lagasse@himssmedia.com