The relationship between ex ante mortality risk and end-of-life medical costs
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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.
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.
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.
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.