Market Factors Associated with Medicare Costs and Cost Growth

Medicare costs in the United States are high and the rate of cost growth is increasing. However, there is significant variability between markets in per-beneficiary costs and the rate of cost growth. We used a variety of public and private data sources to assess which market factors were associated with market-level per-beneficiary costs and cost growth. Taken together, the modeled market factors explained 82 percent of variance in baseline Medicare costs. However, those same factors explained only 22 percent of Medicare cost growth from 2007 to 2010 and 27 percent from 2010 to 2015. The most significant market factors were the levels of chronic diseases within the Medicare  population, although multiple other factors significantly predicted both costs and cost growth.

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