Reducing the growth of Medicare spending: geographic versus patient-based strategies

Abstract

This paper explores the potential of two alternative approaches for reducing the rate of growth in Medicare spending. One strategy would focus on reducing the expenditures of high-spending individuals. Given that a large share of Medicare spending is consumed by relatively few beneficiaries, this approach targets the small group responsible for most of the spending. The other strategy would focus on reducing expenditures in high-spending regions. Because either approach would have to overcome major hurdles before lowering Medicare spending, the likely payoff from the alternative strategies is far from clear. Viewed from a budgetary perspective, concentration in Medicare spending suggests the importance of focusing on high-spending patients.