NCPA - National Center for Policy Analysis

Equality In Medicare Spending

August 22, 2002

Medicare, the federal health program for the elderly, grew from 11 percent of all health care expenditures in 1970 to 17 percent by 2000. Medicare's claims on our national resources are expected to double between now and 2035.

Part of Medicare's rapid growth is due to increased used of its services by women and minorities as inequalities in health care have been eliminated.

  • In 1974, for example, the average white male senior citizen received about 13 percent more Medicare services (as measured by spending) than the average black male (see Figure I), and among women, the average white beneficiary received 18 percent more services than the average black beneficiary.
  • In 1997, however, the average black male was receiving almost 25 percent more in Medicare benefits than the average white male.
  • The average black female was receiving about 37 percent more in Medicare benefits than the average white female.

These raw averages are consistent with the notion that there was inequality in Medicare spending in the 1970s, but at least when comparing average spending by blacks and whites the inequality has disappeared over time.

Overall, there has been a striking decrease in the percent of Medicare beneficiaries who make no use of the system in any given year. For example, in 1974, more than half of the program participants (53 percent) did not receive any benefits from Medicare; but in 1997, only 25 percent of beneficiaries had no reimbursements.

Roughly one-fifth of all beneficiaries in any given year claim reimbursement for hospital services (Part A), a ratio that has not changed much over 35 years. Most of the increase in claims has been for Medicare Part B benefits, which are mainly physicians' services.

Source: Andrew J. Rettenmaier (NCPA senior fellow) and Zijun Wang (both Private Enterprise Research Center at Texas A&M University), "Explaining the Growth of Medicare: Part I," Brief Analysis No. 409, August 22, 2002, National Center for Policy Analysis.


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