Health & Human Services

The Economics of Dying

That myth may be the conventional wisdom, but only 10 percent of our medical-care dollars are spent in the last year of life. And, although spending...
 

That myth may be the conventional wisdom, but only 10 percent of our medical-care dollars are spent in the last year of life. And, although spending per patient increases as death approaches, we certainly do not spend most of our medical dollars in the last six months.

Despite dramatic changes in the U.S. health care system over the last four decades, these statistics regarding the economics of dying have remained constant. Interestingly, the Netherlands, a country known for its aggressive policies on health care, including assisted suicide and euthanasia, also spends about 10 percent of its medical-care dollars in the last year of life.

The U.S. statistics are based on aging Medicare patients who account for about 70 percent of all deaths each year. Five percent of all Medicare patients die per year and spend almost 30 percent ($143 billion in 2009) of the Medicare budget. Medicare patients who die spend about six times more in their last year of life than those who do not, which comes to about $25,000 for each person who dies, compared with the almost $4,000 spent per year for those Medicare patients who do not die.

So are we spending $21,000 per person "extra"? Not exactly. Let's address the obvious issue first: Do we know a year in advance that someone is going to die? Not often. A red flag does not go up. If we could find such an indicator, that might help us decide how much to spend.

Second, would we act differently even if we knew we had less than a year to live? Perhaps less than you think. The most telling example of this was the failure of the Acute Physiology and Chronic Health Evaluation, or APACHE -- a scoring system that gave 95 percent odds that a patient would die in an intensive-care unit. Once a patient received such a prediction, the intent was that the amount of care delivered would be reduced. But this reduction did not occur. Why? Many people have trouble facing the reality of death, preferring to believe that they are part of the 5 percent who will beat the odds: "Aunt Bertha always beats the odds, and she will now. ..."

In addition, just as with other kinds of health care, the use of end-of-life care varies by race, ethnicity, and socioeconomic factors. Racial minorities generally use fewer medical services until life's end, when they use more than whites. For example, African Americans use 25 percent less care in the three years before death than white persons, but 18 percent more in the last year of life, with similar trends seen for Mexican Americans. This is mainly due to the use of hospital-based, life-sustaining interventions at the end of life. Racial minorities use hospice less often, which may reflect distrust of the medical system or a preference for in-patient care. These types of differences and disparities in end-of-life care are seen in other countries as well.

But even knowing and accepting death doesn't save many dollars, partially because medicine keeps coming up with more things to do at the end of life. Three ways have been proposed to decrease costs at the end of life and at the same time "do the right thing for the patient."

1. Advance Directives: You would think that advance directives such as a "living will" would decrease costs. Current studies do not show much (if any) savings, somewhere in the neighborhood of zero to 10 percent. Why? In part it may be because only one in five Americans have completed living wills and, in many cases, by the time the family decides that the living will applies, the end is indeed close (a few days), and there is not much savings.

2. Hospice: Hospice care is used most often for patients with advanced cancer, but more and more those with heart, lung, and neurological conditions are using it as well. In a study looking at the effects of hospice care in which all costs were counted, expenditures were 4 percent higher overall among hospice enrollees than among those not in hospice. Hospice care has not been shown to save money, except in cancer patients, where it can provide savings of 7 to 17 percent among patients with aggressive cancers diagnosed in the last year of life. For others without cancer, particularly the oldest patients over the age of 80, expenditures actually increase in the last months of life because of the constant services offered through hospice care.

3. Withholding "Futile Care" -- Do Not Resuscitate: When a patient is thought by the family and physician to be beyond hope, an order can be written in the chart not to attempt to bring the patient back if his or her heart stops; this is called a "do not resuscitate" or DNR order. When patients with and without DNR orders are analyzed, their end-of-life costs are the same. The reason appears to be that the DNR order is generally written at a time late in the patient's course of treatment when savings will be minimal. Beyond DNR, the definition of "futile care" becomes a matter of debate. Determining what "futile medical care" is and when to withhold it raises an important point: Even if the patients and families at the end of life refuse life-sustaining intervention, the patient may not require less care but care of a different kind, which may be just as expensive.

Therefore, despite a belief that the use of advance directives and hospice care, along with reducing "futile care," can save our health system money, only 3.3 percent ($69 billion) of all health spending could actually be saved by using such practices. We can look at this potential savings in two ways: First, it is insignificant since national health expenditures increase more than 3 percent every year and this is a one-time savings of less than one year's increase. We believe the second way is more important: In the name of appropriate and compassionate patient care, we must stop doing what we should not be doing. If we can find the $69 billion in ways everyone agrees should be saved and provide patients near death with medical and support services that are appropriate but not "excessive," we could use that money to improve the health of others or reduce our health care spending.

We leave you with this disturbing thought about the last year of life. Remember that those over the age of 65 cost, on average, $25,000 in their last year. A premature infant born at less than 25 weeks (normal being 40 weeks) weighing less than one pound costs on average $202,700 for the initial hospitalization alone. Although premature infants make up a small percentage of the total number of births each year, they constitute about 50 percent of total hospital spending on infant hospital stays, and half of infants born very prematurely end up with major disabilities. While many focus on costs in the last year of life, costs in the first year of life will likely receive similar scrutiny as our nation examines the long-term benefits and costs of medical care.

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