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Health Care Costs and Financing

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Costs for end-of-life care are only slightly higher for those who die than for survivors with similar characteristics

About one-fourth (27 percent) of Medicare costs are for the last year of life, unchanged from 20 years ago. These high costs reflect care for multiple severe illnesses typically present near death. In fact, much of what has been labeled the "high cost of dying" is just the cost of caring for severe illness and functional impairment, according to the authors of a recent study that was supported by the Agency for Healthcare Research and Quality (HS10561).

Decedents' costs are, roughly speaking, not much different from those of survivors with similarly complex medical needs, note the researchers. They found that 38 percent of Medicare patients have some nursing home use in the year of their death, and hospice care is now used by half of dying Medicare cancer patients and 19 percent of dying Medicare patients overall.

Since most of us will suffer a substantial illness burden and functional or cognitive impairment prior to death, we should judge a proposed future Medicare system, at least in part, on the likelihood that it will provide good care to people at the end of life, concludes Joanne Lynn, M.D., of RAND's Center to Improve Care of the Dying. Dr. Lynn and her colleagues analyzed Medicare claims data for 1993 through 1998, Medicare Current Beneficiary Survey Cost and Use files for 1991 through 1996, and the 1993 National Mortality Followback Survey on death certificates to characterize Medicare decedents and health care costs during the last year of life.

For the mid-1990s, decedents' per capita Medicare program outlays were about six times higher than outlays for survivors. A typical decedent suffered from nearly four serious diseases in the last year of life, while survivors averaged slightly more than one in a typical calendar year. About three-fourths of decedents had some mention of heart disease in the claims data; roughly one-third had cancer, stroke, chronic obstructive pulmonary disease, or pneumonia/influenza; and more than one-fourth had some form of dementia. Yet, when compared with similarly old and sick survivors, decedents had less than 30 percent higher medical costs during the last year of life, perhaps attributable in part to a more likely episode of nursing home care during the year.

See "Medicare beneficiaries' costs of care in the last year of life," by Christopher Hogan, June Lunney, Jon Gabel, and Dr. Lynn, in the July 2001 Health Affairs 20(4), pp. 188-195.

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