Recessions linked to higher Medicare spending

New research suggests a fairly strong correlation between recessions and spikes in Medicare spending, according to a study in Health Affairs.

The research was conducted by Melissa McInerney and Jennifer Mellor, economics professors at William & Mary in Williamsburg, Va., who examined economic recessions between 1991 and 2009, along with unemployment rates and the spending growth for both Medicare and the overall healthcare system.

They concluded that while overall spending growth tended to be blunted by recessions, every 1 percent spike in the unemployment rate was linked to a 0.45 percent increase in Medicare spending growth, according to the study.

The researchers reached two conclusions as to the correlation. The first is that those individuals slightly younger than Medicare age might postpone care until the become eligible due to job losses or other financial duress--meaning they require more higher-cost care when they are finally eligible to enroll in the program.

The second conclusion has greater implications for hospitals: There is a "greater capacity, inclination and financial incentive" to treat Medicare patients during a time of recession to make up for the loss of volume from other payers.

The research comes at a time when the Congressional Budget Office is calling for ways to slow healthcare spending before it overwhelms the federal budget.

For more:
- read the study abstract

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