The Corner

Politics & Policy

End-of-Life Care Is Only 9 Percent of Health-Care Costs

There is a widely believed myth that the elderly and dying take up a huge amount of the overall health-care budget, and that, by empowering “death panels,” imposing rationing or “futile care” forced withdrawal of treatment, and legalizing assisted suicide, we could go far in reducing health-care expenditures, which take up 17.9 percent of the total U.S. GDP.

This myth is driven by story after story and column after column warning urgently that the the spending on patients in the last year of life is busting the health-care bank. Here’s a typical example from a Michael Bell column in Forbes five years ago:

According to one study (Banarto, McClellan, Kagy and Garber, 2004), 30% of all Medicare expenditures are attributed to the 5% of beneficiaries that die each year, with 1/3 of that cost occurring in the last month of life.  I know there are other studies out there that say slightly different things, but the reality is simple: we spend an incredible amount of money on that last year and month.

Is it worth it? The answer seems to be no.

Not so fast. In actuality, total spending on end-of-life care is only 9 percent of the total cost of health care. And even the Medicare spending issue as addressed by Bell is misleading. From Peter R. Orzag’s recent column in Bloomberg

As Zeke Emanuel and Linda Emanuel pointed out more than 20 years ago, about 5 percent of Medicare beneficiaries die each year, compared with about 1 percent of the total population. As a result, end-of-life care represents a smaller share of total health-care spending than of Medicare spending.

Indeed, the most recent estimates suggest that less than 9 percent of total U.S. health-care spending occurs in the final year of life. And that share is actually lower than in many other developed countries.

But even so, Wesley! We could still save a lot of money by cutting off curative and life-extending treatment to the elderly and dying and forcing them — as Barack Obama infamously said in response to a woman who asked about her elderly mother needing heart surgery — to “take a painkiller” instead.

Again, not so fast. We’ve also known for years that it is hard to predict which people are in the last year of their life. Indeed, people we think will die soon often actually don’t. Orzag cites a new study that reached a similar conclusion.

They find that most people who die aren’t expected to, and many people who are expected to die don’t. In particular, less than 10 percent of those who die within 12 months had a predicted mortality above 50 percent.

And if beneficiaries are ranked by their predicted mortality, the group with a high chance of dying accounted for only 5 percent of total Medicare spending, and among them about half survived in any case, perhaps in part due to the health care they received.

As the study’s authors conclude, “These findings suggest that a focus on end-of-life spending is not, by itself, a useful way to identify wasteful spending.”

So let’s put this old canard to bed and stop blaming the elderly and terminally ill for our health-care spending problems. It’s not that simple, and it’s not their fault.

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