Myth: The cost of dying is an increasing strain on the healthcare system

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Myth busted June 2003

In the ongoing quest to identify the cause of growing healthcare budgets, fingers are pointed in a number of directions - the aging population and expensive new technology in particular.

There is a widespread belief that healthcare systems are spending more and more to provide intensive and aggressive care to older patients living out their final months. These "heroic efforts" to treat the dying are becoming a bigger spending factor than in the past, so the myth goes, due to the availability of more expensive technology.

The image of teams of doctors, nurses and other healthcare professionals gathered around elderly patients, with an arsenal of the best drugs and equipment at their side, is a convenient one - but how close is it to reality?

Thirty years of evidence

The perception that the cost of treating the dying drives up healthcare budgets is not new, but it has also been debunked by more than 30 years' worth of evidence. Research on healthcare spending shows that end-of-life costs tend to account for a minority of total costs to healthcare systems; research from both North America and Europe shows that acute healthcare costs during the last year of life account for only about 10 to 12 percent of total healthcare budgets. i, ii

The American Medicare plan, which covers only healthcare for seniors, has been particularly well-researched. Studies dating back to the 1970s have shown that the five to six percent of seniors who die each year account for about 27 to 30 percent of that program's costs for treating the elderly. iii- vi

Spending steady since 1960s

This myth stays alive for a couple of significant reasons. First, the increasing number of seniors in the population has led to the belief that the costs of treating them will overwhelm the system - a myth refuted by another Mythbuster on the aging population. vii Second, improvements in care in recent years, largely due to new and more expensive technology, have led to the belief that these resources are too often being used in last-ditch efforts to keep patients alive - and causing increases in healthcare budgets.

Despite these developments, the data appear to show that the proportion of healthcare spending going to care for those at the end of life has largely remained stable over time. iii In the United States, for example, the money being spent in the last year of life has remained steady since the late 1960s, when their Medicare program was first introduced to provide hospital and physician coverage to seniors older than age 65. iv, viii, ix

And despite changes to the technology available, the fact is most people still die without an expensive, high-tech struggle. i Indeed, a major study of Manitoba patients found that 38 percent of seniors in that province died after only two weeks or less in a hospital, x and 46 percent of Medicare recipients in the United States received no hospital treatment at all in the year before they died. xi

Nursing homes affect costs

Research shows that the older people are when they die, the lower the medical costs incurred during the final year. v, xii- xiv Instead, these individuals appear to be using nursing home services to a much greater degree. x American research has shown nursing home costs make up 62 percent of spending in the last 18 months of life for people who were older than 85 when they died, and 24 percent of spending for those who were between the ages of 65 and 74 when they died. xi

In addition, recent studies of Manitoba's nursing homes show that because individuals being admitted to nursing homes are spending more time living in the community before they go into a care home, they are older and frailer when they enter a facility, and they die after a shorter stay. xv, xvi The Manitoba research shows that while admission rates have remained stable in that province, the average number of days spent in a care home declined by about 20 percent between 1985 and 1999. xvi

American Medicare payments on hospitals and
physicians in the last two years of life decline
with increasing age at death
Data from Lubitz et al, 1995

MB Cost of dying graph

Research can't do everything

Clearly, research has debunked the myth that the cost of dying is growing and overwhelming the healthcare system. The question that research will never answer, however, is whether that spending is too high - that's a question of values, which number-crunching will never answer.

Even if society does decide that spending at the end of life is too high, it is unclear what could be done about it. Research has shown some likelihood of reducing costs with increased use of hospice and advance directives, ii but there are other critical and possibly disturbing policy implications that will emerge as people try to decide how aggressive medical care at the end of life should be and how costs can be reduced.

In the end, it is difficult to predict which patients receiving treatment will live and which will die (with the exception of some forms of terminal cancer). In other words, care in the last year of life is not so much "spending on the dying" as it is just providing regular medical care for people who have serious health problems. iv, v, xvii

References:

i. Stooker, T et al. 2001. "Costs in the last year of life in The Netherlands." Inquiry; 38(1): 73-80.

ii. Emanuel, EJ. 1996. "Cost savings at the end of life. What do the data show?" Journal of the American Medical Association; 275(24): 1907-1914.

iii. Hoover, DR et al. 2002. "Medicare expenditures during the last year of life: findings from the 1992-1996 Medicare Current Beneficiary Survey." Health Services Research; 37(6): 1625-1642.

iv. Hogan, C et al. 2001. "Medicare beneficiaries' costs of care in the last year of life." Health Affairs; 20(4): 188-195.

v. Lubitz, J and Riley, GF. 1993. "Trends in Medicare payments in the last year of life." New England Journal of Medicine;328(15): 1092-1096.

vi. Lubitz, J and Prihoda, R. 1984."The use and costs of Medicare services in the last 2 years of life." Health Care Financing Review; 5(3): 117-131.

vii. Canadian Health Services Research Foundation. 2001. "Mythbuster: The aging population will overwhelm the healthcare system."

viii. Bird, CE, et al. 2002. "Age and gender differences in health care utilization and spending for Medicare beneficiaries in their last years of life." Journal of Palliative Medicine; 5(5): 705-712.

ix. McCall, N. 1984. "Utilization and costs of Medicare services by beneficiaries in their last year of life." Medical Care; 22(4): 329-342.

x. Roos, NP et al. 1987. "Health care utilization in the years prior to death." Milbank Quarterly; 65(2): 231-254.

xi. Temkin-Greener, H et al. 1992. "The use and cost of health services prior to death: a comparison of the Medicare-only and the Medicare-Medicaid elderly populations." Milbank Quarterly; 70(4): 679-701.

xii. Levinsky, NG et al. 2001. "Influence of age on Medicare expenditures and medical care in the last year of life." Journal of the American Medical Association; 286(11): 1349-1355.

xiii. Spillman, BC and Lubitz, J. 2000. "The effect of longevity on spending for acute and long-term care." New England Journal of Medicine; 342(19): 1409-1415.

xiv. Lubitz, J et al. 1995. "Longevity and Medicare expenditures." New England Journal of Medicine; 332(15): 999-1003.

xv. Frohlich, N et al. 2002. "Estimating personal care home bed requirements." Manitoba Centre for Health Policy.

xvi. Menec, VH et al. 2002. "The health and health care use of Manitoba's seniors: Have they changed over time?" Manitoba Centre for Health Policy.

xvii. Scitovsky, AA. 1984. "'The high cost of dying:' what do the data show?" Milbank Memorial Fund Quarterly Health and Society; 62(4): 591-608.

Disclaimer:

Mythbusters are prepared by staff at the Canadian Health Services Research Foundation and published only after review by experts on the topic. The Foundation is an independent, not-for-profit corporation. Interests and views expressed by those who distribute this document may not reflect those of the Foundation.