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Do Out-of-Pocket Health Expenditures Rise With Age Among Older Americans?

Correspondence: Address correspondence to Susan T. Stewart, Harvard Interfaculty Program for Health Systems Improvement and the National Bureau of Economic Research, 1050 Massachusetts Avenue, Cambridge, MA 02138-5398. E-mail: susan_stewart{at}harvard.edu

Purpose: Relationships are examined between age and out-of-pocket costs for different health goods and services among the older population. Design and Methods: Age patterns in health service use and out-of-pocket costs are examined by use of the 1990 Elderly Health Supplement to the Panel Study of Income Dynamics (N = 1,031, age 66+). Multivariate regression is used to examine how age effects are mediated by health, insurance, and socioeconomic variables. Results: Although long-term care expenditures increased with age, out-of-pocket costs for most other services did not. Total out-of-pocket costs increased with age only when nursing home costs were included. Increases with age in hospital and prescription costs were explained by declining health. Patterns of service use suggested reduced access to discretionary care among the oldest old. Implications: Although expenditures did not increase with age for most services, the high personal cost for nursing home care among the oldest old underlines the need for increased efforts to support them in the community. Greater spending by those in poor health highlights the importance of preventing age-related health conditions and their complications. Improved access to discretionary care among the oldest old may help to reduce the need for care in higher cost settings. The high prevalence of out-of-pocket prescription spending across the age range provides impetus for current efforts to reduce these costs.

Key Words: Spending • Cost • Care • Utilization • Medicare • Elderly

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