title: Medical spending and the health of the elderly.
abstract: OBJECTIVE
  To estimate the relationship between variations in medical spending and health outcomes of the elderly.
  
  
  METHODS
  1992-2002 Medicare Current Beneficiary Surveys.
  
  
  METHODS
  We used instrumental variable (IV) estimation to identify the relationships between alternative measures of elderly Medicare beneficiaries' medical spending over a 3-year observation period and health status, measured by the Health and Activity Limitation Index (HALex) and survival status at the end of the 3 years. We used the Dartmouth Atlas End-of-Life Expenditure Index defined for hospital referral regions in 1996 as the exogenous identifying variable to construct the IVs for medical spending.
  
  
  METHODS
  The analysis sample includes 17,438 elderly (age >64) beneficiaries who entered the Medicare Current Beneficiary Survey in the fall of each year from 1991 to 1999, were not institutionalized at baseline, stayed in fee-for-service Medicare for the entire observation period, and survived for at least 2 years. Measures of baseline health were constructed from information obtained in the fall of the year the person entered the survey, and changes in health were from subsequent interviews over the entire observation period. Medicare and total medical spending were constructed from Medicare claims and self-reports of other spending over the entire observation period.
  
  
  RESULTS
  IV estimation results in a positive and statistically significant relationship between medical spending and better health: 10 percent greater medical spending over the prior 3 years (mean=U.S.$2,709) is associated with a 1.9 percent larger HALex value (p=.045; range 1.2-2.2 percent depending on medical spending measure) and a 1.5 percent greater survival probability (p=.039; range 1.2-1.7 percent).
  
  
  CONCLUSIONS
  On average, greater medical spending is associated with better health status of Medicare beneficiaries, implying that across-the-board reductions in Medicare spending may result in poorer health for some beneficiaries.
authors: Department of Health Administration and Policy, College of Health and Human Services, George Mason University, 4400 University Dr., MSN 2G7, Fairfax, VA 22030, USA. jhadley1@gmu.edu
authors: Jack
authors: J
authors: Hadley
authors: Timothy
authors: T
authors: Waidmann
authors: Stephen
authors: S
authors: Zuckerman
authors: Robert A
authors: RA
authors: Berenson
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