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New Research Shows Higher Spending on Medicare Beneficiaries Results in Better Outcomes

A new study analyzing more than 17,000 Medicare beneficiaries finds that higher spending on medical services results in better overall health and greater survival scores. While the researchers quantify the finding as a “modest effect,” the research nevertheless contradicts previous studies, which showed little or no relationship between how much Medicare spends—which varies greatly by geographic area—and the health outcomes for elderly beneficiaries. 

Researchers at George Mason University and the Urban Institute for the first time looked at extensive information on individual Medicare enrollees over a three-year span—providing, in their view, richer data than previous studies in this arena, which looked at large segments of the Medicare population and used averages to draw conclusions. The authors say the findings suggest that policy-makers need to understand that any across-the-board reductions in Medicare spending in a geographic area or on a national level could have harmful effects on beneficiaries’ health. 

Funded by the Robert Wood Johnson Foundation’s Changes in Health Care Financing and Organization initiative, which is administered by AcademyHealth, the study’s findings appear in Health Services Research.