Can we afford comprehensive, supportive care for the very old?

OBJECTIVE: To address the question, 'Is there enough overuse of Medicare reimbursement to hospitals that reallocation of excess could provide sufficient funds to enhance home care and community services?' DESIGN: Simulation using data from the Medicare Current Beneficiary Survey (MCBS) to estimate dollars that might be reallocated from hospital reimbursement. PARTICIPANTS: A total of 3577 persons aged 80 and older in a stratified sample of Medicare beneficiaries interviewed in September 1992 in the MCBS. MEASUREMENTS: We ranked the United States hospital service areas' (HSAs) Medicare hospital discharge rates. We assigned the beneficiaries in the MCBS to the HSAs based on their residence zip codes. The hospitalization expenditures and mortality rates of MCBS respondents living in HSAs in each quartile were compared. RESULTS: By reducing hospital utilization to the mean level now used by the lowest quartile of HSAs, $560 would be saved per Medicare beneficiary aged 80 or older (P = .004) with no difference in mortality rates. These savings could purchase 40 visiting nurse visits per year for those in need. Potential savings would be $152 per Medicare beneficiary if hospital utilization were reduced from that used by the highest quartile to the level of the lower three quartiles of HSAs, enough to purchase about 11 additional visiting nurse visits. CONCLUSION: This simulation suggests that the very old might safely receive less hospital care. Because relatively few older people need home and community services in a year, these per capita savings could be reallocated to purchase many services for those having the greatest need.