Medicare spending for elderly beneficiaries who need long-term care.

To better understand how elderly people with long-term care needs might be affected by Medicare's greater reliance on risk plans, we examine Medicare spending for this population using data from the Medicare Current Beneficiary Survey. Medicare spending for elderly people with functional limitations is substantially greater than for other beneficiaries, but highly variable. Medicare spends more, however, for community residents with moderate to severe functional limitations than for nursing home residents with similar degrees of limitation. These results raise concerns about the incentives of Medicare risk plans in caring for enrollees with long-term care needs.