The Relationship between Ex Ante Mortality Risk and End-of-Life Medical Costs

David Howard, Steven Culler, Benjamin Druss and Kenneth Thorpe
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David Howard: Department of Health Policy and Management, Emory University, Atlanta, Georgia, USA
Steven Culler: Department of Health Policy and Management, Emory University, Atlanta, Georgia, USA
Benjamin Druss: Department of Health Policy and Management, Emory University, Atlanta, Georgia, USA
Kenneth Thorpe: Department of Health Policy and Management, Emory University, Atlanta, Georgia, USA

Applied Health Economics and Health Policy, 2006, vol. 5, issue 1, pages 37-44

Abstract: Background: Spending on medical care for patients in their last year of life accounts for over one-quarter of US Medicare programme outlays. While the magnitude of spending on end-of-life care is striking, it is difficult to determine if expenditures are wasteful or simply reflect the inherent uncertainty facing physicians. Methods: Using a sample of fee-for-service Medicare beneficiaries, we document the association between mortality risk and end-of-life medical spending. Mortality risk at 1 year before death was estimated using a logistic model with age, sex and co-morbidities as covariates. Results: We found that, among decedents, end-of-life spending is inversely related to predicted mortality risk, ranging from $US23_000 for decedents with mortality risk in the interval 0.00-0.05 to $US16_000 for decedents with mortality risk >0.25 (1999 dollar values). In aggregate, >50% of Medicare spending on medical care in the last year of life is for beneficiaries with below-median mortality risk. Conclusions: We conclude that physicians treat patients who are likely to die differently than those who are not. Substituting palliative for curative care for patients with unfavourable prognoses may lower total expenditures, but probably not as much as commonly expected.

Keywords: Cost-analysis; Mortality (search for similar items in EconPapers)
JEL-codes: C D I Z I1 I19 I18 I11 (search for similar items in EconPapers)
Date: 2006
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