DISABILITY AND MEDICARE COSTS OF ELDERLY PERSONS

Widely studied as a predictor of long-term care use, functional disabi lity is also an important explanatory variable for acute care costs sp ent for the elderly. As policy makers contemplate ways to control rapi dly growing Medicare expenditures, such as increasing the enrollment o f beneficiaries into managed care programs, knowledge about the relati on between functional disability and Medicare costs is likely to becom e more important for the design of program features. The research desc ribed here uses data from the new Medicare Current Beneficiary Survey to estimate the relation between functional disability and Medicare co sts, the effects on costs of interactions between disability and other personal characteristics of beneficiaries, and changes in the level o f disability and Medicare costs.