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Real Life Story
How Much Do We Spend on End-of-Life Care?

It's not surprising that individuals in their last year of life consume a disproportionate share of medical resources. One percent of the population accounts for 30 percent of the nation's health care expenditures. Nearly half of those people are elderly.

Medicare, the health insurance program for the elderly, spends nearly 30 percent of its budget on beneficiaries in their final year of life. Slightly more than half of Medicare dollars are spent on patients who die within two months.

Although Medicare costs for services have continued to rise over the years, the proportion of payments for persons near death in relation to Medicare's total budget has changed little. The Health Care Financing Administration (HCFA), which oversees Medicare spending, hasn't tracked spending trends for the past decade. But the agency did a major analysis of end-of-life spending trends in 1993, looking at data for 1975, 1980, 1985, and 1988. This remains one of the most extensive studies in the field.

Their findings belie perceptions that a larger percentage of medical expenses are accounted for by terminally ill persons whose lives were prolonged by expensive technology. Gerald Riley, a HCFA actuary, conducted the analysis with colleague James Lubitz and published it in the 1993 New England Journal of Medicine. They found no evidence that elderly persons in the last year of life account for a larger share of Medicare expenditures today than before the onslaught of technology.

In fact, Medicare paid the exact same percentage for patients in the last two months of life in 1976 as in 1988. This implies that heroic efforts to preserve life in the last months did not have a disproportionate effect on increasing the proportion of Medicare outlays. Riley says that if life-preserving efforts had become more frequent, there would have been an increase in the percentage of dollars spent in the last couple of months of life.

More data on end-of-life care:

  • Nearly one third of terminally ill patients with insurance used up most or all of their savings to cover uninsured medical expenses such as home care.

  • 27 to 30 percent of Medicare payments cover the cost of care for people in the last year of life.

  • 40 percent of Medicare dollars cover care for people in the last month.

  • 12 percent of Medicare spending covers people who are in the last two months.

  • 10 percent of Medicare beneficiaries account for 70 percent of program spending.

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