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The rapidly expanding proportion of the US population 65 years and older is anticipated to have a profound effect on health care expenditures. Whether the changing health status of older Americans will modulate this effect is not well understood. This study sought to determine the relationship between functional status and government-reimbursed health care services in older persons.

Longitudinal cohort study of a representative sample of community-dwelling persons 72 years or older. Clinical data were linked with data on 2-year expenditures for Medicare-reimbursed hospital, outpatient, and home care services and Medicare- and Medicaid-reimbursed nursing home services. Per capita expenditures associated with different functional status transitions were calculated, as were excess expenditures associated with functional disability adjusted for demographic, health, and psychosocial …