Modeling Health Care Spending Growth of Older Adults

Journal Article

Modeling Health Care Spending Growth of Older Adults

Abstract

To forecast older adults' out-of-pocket health care spending, we augment Urban Institute's DYNASIM with modules that incorporate demand responses and economic equilibria, with dynamics driven by exogenous technological change. The model projects total out-of-pocket spending as a share of income for adults aged 65 and older. People with lower incomes and poor health fare worse, despite Medicaid protections. Spending as a percent of income rises markedly from 2012 to 2035 for the median beneficiary, and more for low-income beneficiaries and the near poor in fair/poor health. Despite Medicare coverage, near-poor seniors will face out-of-pocket spending that would render them underinsured.

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