The high costs of treating chronic diseases suggest that reducing their prevalence would improve Medicare's financial stability. In this paper the authors examine the impact of selected chronic diseases on the distribution of health spending and its variation over the course of disease. They also use a microsimulation model to estimate these conditions' impact on life expectancy and health spending from age sixty-five to death. A sixty-five-year-old with a serious chronic illness spends $1,000-$2,000 more per year on health care than a similar adult without the condition. However, cumulative Medicare payments are only modestly higher for the chronically ill because of their shorter life expectancy.
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