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The Myth Regarding the High Cost of End-of-Life Care

Health care reform debate Melissa D. Aldridge, PhD, MBA, and Amy S. Kelley, MD, MSHS
in the United States is largely
focused on the highly con-
IN 2011, THE UNITED STATES than preceding years,18,19 population, we started with data
centrated health care costs
among a small proportion of spent $2.7 trillion on health care, between-individual differences in from the 2011 MEPS, the most
the population and policy more than double what was spent in health care costs at any stage in life comprehensive data set of annual
proposals to identify and tar- 2000.1 It is projected that, by 2040, outweigh within-individual differ- health care expenditures for the
get this high-cost group. 1 of every 3 dollars spent in the ences. These substantial limitations community-dwelling US popula-
To better understand this United States will be spent on health of the existing evidence character- tion. An important limitation of the
population, we conducted care.2,3 Health care reform debates izing the high-cost population in MEPS data, however, is that the
an analysis for the Institute frequently highlight highly concen- the United States may have hin- sample base represents the civilian,
of Medicine Committee on trated health care costs among dered policymakers attempts to noninstitutionalized population
Approaching Death using
a small proportion of the population rein in health care costs. and thus excludes residents of
existing national data sets,
and promote policy proposals to Here we address this important long-term care (LTC) facilities. To
peer-reviewed literature, and
identify this high-cost group and gap in our understanding of the address this omission, we sepa-
published reports. We esti-
mated that in 2011, among signicantly reduce its costs. Indeed, high-cost population in the United rately estimated the total annual
those with the highest costs, a wide range of programs are States by providing estimates of health care expenditures for LTC
only 11% were in their last attempting to target chronically ill total spending among those in the facility residents as the sum of
year of life, and approxi- and complex patients with cost- last year of life and describing 3 expenditures for the care of resi-
mately 13% of the $1.6 trillion effective interventions.4--10 Yet, distinct subgroups within the high- dents by facilities and expenditures
spentonpersonalhealthcare there exist no national, comprehen- cost patient population. Our ana- for the care of residents outside of
costs in the United States sive patient-level data on the health lyses consider contributions from facilities, such as during hospital
was devoted to care of in- care expenditures of the US popu- a more comprehensive set of payers stays. These estimates were calcu-
dividuals in their last year of
lation from which to estimate the than those included in prior studies. lated with data from the 2011
life. Public health interven-
expenditures of the high-cost group. Because total spending data rep- National Health Expenditure
tions to reduce health care
costs should target those Lack of comprehensive data is the resenting all payers do not exist in Accounts,1 adjusted according to
with long-term chronic con- primary reason detailed analyses of a single population-based source, the methods of Sing et al.20
ditions and functional limita- this high-cost group have not been our estimates draw upon a combi- We therefore estimated total
tions. (Am J Public Health. conducted and why misperceptions nation of data from existing national health care expenditures for the
2015;105:24112415. doi:10. about this group are common. data sets (including the Medical US population in 2011 as $1627
2105/AJPH.2015.302889) The discussion regarding the Expenditure Panel Survey [MEPS] billion on the basis of 2011 MEPS
high-cost population in the United and the Health and Retirement data21 ($1330 billion) and our
States has often focused on the Study), the peer-reviewed literature, estimate of expenditures for LTC
population at the end of life, relying and published reports. We also facility residents ($297 billion).
on evidence suggesting that those describe the persistence of health (Our estimate of $1.6 trillion is
at the end of life drive health care care spending across 3 major sub- lower than the National Health
spending.11---17 This evidence is bi- sets within the high-cost group. In Expenditure Accounts estimate
ased, however, in that most studies our opinion, the ability to design of $2.7 trillion, which included
have examined only Medicare ex- policy solutions that target individ- expenditure categories unrelated
penditures and, therefore, only the uals with exceptionally high health to patient care such as government
Medicare population. Although care costs is contingent on under- administration of health care pro-
health care for older adults is gen- standing the characteristics that de- grams, public health initiatives,
erally more costly and the majority ne this population and, thus, how and revenue from gift shops and
of costs in the last year of life are and why they incur such high costs. hospital cafeterias.)
paid by Medicare, such analyses Of the $1627 billion spent on
exclude the substantial health care EXPENDITURES health care in 2011, we estimate
costs paid by Medicaid, private in- ALLOCATED TO THE LAST that approximately 13%, or $205
surers, and individuals themselves. YEAR OF LIFE billion, was devoted to care of in-
Furthermore, whereas on an indi- dividuals in their last year of life.22
vidual basis the last year of life may To estimate total annual health We used the Health and Retire-
be signicantly more expensive care expenditures for the US ment Study cohort to estimate the

December 2015, Vol 105, No. 12 | American Journal of Public Health Aldridge and Kelley | Peer Reviewed | End-of-Life Care | 2411

cost of care for individuals in their d

individuals who persistently
last year of life paid by Medicare23; generate high annual health care
adjusted the estimate to reect the costs owing to chronic condi-
additional 39% of costs in the last tions, functional limitations, or
year of life that are paid by Medic-
aid (10%), out of pocket (18%,
other conditions but who are not
in their last year of life and live
High Cost
primarily for nursing home care),
and by other sources including
for several years generating high
health care expenses (population Population
private payers (11%)11; and then with persistent high costs). 18.2 million
used the Bureau of Labor Statistics
Consumer Price Index to further 2 million
Population at the End of Life End-of-Life
adjust the estimate to 2011 dollars. Population
We found that of the 18.2
We subsequently applied this esti-
million individuals who were in
mate of per-person costs in the last 0.5 million
the highest 5% of the population
year of life to the total number of
in terms of total health care costs,
deaths in 2011.
11% (2 million) were in their last Source. Total population and health care costs were obtained from 2011 Medical
year of life. These 2 million de- Expenditure Panel Survey data21 adjusted to include the nursing home population.24 The
ILLNESS TRAJECTORIES distribution of total costs for the end-of-life population was estimated from Health and
cedents represented 80% of the
IN THE HIGH-COST Retirement Study data linked to Medicare claims data, adjusted to include non-Medicare
2.5 million annual deaths in the payers11 and adjusted to 2011 dollars via the Bureau of Labor Statistics Consumer Price
United States in 2011. Con- Index.
versely, the remaining 20% of
The distribution of health care FIGURE 1Estimated overlap between the population with the
decedents (0.5 million) did not
expenditures for the US population highest health care costs and the population at the end of life:
incur the highest health care costs
consistently exhibits a signicant United States, 2011.
in their last year of life.
tail segment of the population
with extremely high costs. Our
Population With a Discrete early-stage cancer, complete surgi- is those with persistently high
analysis identied 18.2 million
High-Cost Event cal resection and other rst-line health care costs. This subgroup is
individuals in the top 5% of total
We estimated that the largest therapies, and achieve complete characterized by chronic condi-
annual health care spending who
proportion of the population with remission; and those who are on tions and functional limitations
incurred average annual health care
the highest annual health care ex- frequent hemodialysis while wait- and tends to be older.25 The exis-
expenditures of $17 500 or more
penditures (49%) consisted of ing for a kidney transplant and then tence of a subgroup of individuals
per person and accounted for $976
individuals who experienced a dis- receive a transplant and return to with persistently high spending
billion in health care costs overall.
crete event generating signicant stable health. Once such an event was evident in an analysis of
Of these estimated 18.2 million
health care costs in 2011. We used has occurred, there may be rela- Medicare beneciaries showing
individuals (5% of the population)
evidence from a recent study17,26 tively less opportunity for cost re- that nearly half of beneciaries
who generate the highest annual
focusing on the persistence of ductions in this population. Given who incurred high costs in 1997
costs, only 11% (2 million individ-
spending patterns over time that that most of these individuals incurred high costs in 1996 as
uals) are in their last year of life
showed that 62% of individuals in return to better health (as pre- well, and more than 25% also
(Figure 1).24 Longitudinal analyses
the top 5% of health care spending sumed by their lower costs) within incurred high costs in the prior 4
of spending17,25,26 show that the
in a given year were no longer in a year, health care dollars may years. Furthermore, 44% of these
population with the highest annual
the top 5% of spending the next already be well spent. Policymakers individuals continued to incur
health care costs can be divided into
year. A portion of these individuals must consider, however, that public high costs in 1998 and 25% in
3 broad illness trajectories:
died; the remainder transitioned to health initiatives fostering healthier 2001.27 This is a key population
individuals who have high the bottom 95th percentile in health lifestyles and careful management for targeted interventions to
health care costs because it is care spending the following year.17,26 of chronic disease might reduce the reduce costs given that such in-
their last year of life (population Some examples of this illness incidence of these discrete high-cost terventions may enable cost re-
at the end of life), trajectory might include people health events across the population. ductions across multiple years.
individuals who experience who have a myocardial infarction,
a signicant health event during undergo coronary bypass graft Population With Persistently LIMITATIONS
a given year but who return to surgery, and, after a period of re- High Costs
stable health (population with habilitation, return to stable health; The second largest proportion The limitations of our analyses
a discrete high-cost event), and individuals who are diagnosed with of the high-cost population (40%) are primarily attributable to the

2412 | End-of-Life Care | Peer Reviewed | Aldridge and Kelley American Journal of Public Health | December 2015, Vol 105, No. 12

fact that longitudinal data repre- for our aging population are For example, a recent com- a specic intervention. For exam-
senting all payers in our health potentially profound.28 mentary2 suggested that an ple, using data regarding the pop-
care system do not exist in a single estimated 22% of health care ulation with chronic conditions
population-based source, and thus POPULATION-LEVEL expenditures are related to poten- and functional limitations30 and
we synthesized data and estimates INTERVENTIONS tially avoidable complications, our estimates with respect to the
from multiple sources for this such as hospital admissions for population at the end of life, we
analysis. First, note that MEPS A substantial proportion of the patients with diabetes with ketoa- can imagine a hypothetical inter-
data are limited to the civilian high-cost group has persistently cidosis or amputation of gangre- vention and 3 potential target
noninstitutionalized US popula- high costs,17,25,26 underscoring the nous limbs or for patients with populations: individuals with
tion. To overcome this omission potential scal impact of targeting congestive heart failure and chronic conditions and functional
of the LTC population, we relied this group with high-value shortness of breath due to uid limitations, older adults with
on other sources of health care (i.e., high-quality and lower-cost) overload.2,31 Furthermore, the chronic conditions and functional
expenditure data for nursing interventions. The challenge re- disproportionally higher costs for limitations, and individuals at the
home residents.1,20 sides in appropriate prospective this group may reect a lack of end of life. If we assume, for in-
Second, our estimates of end- identication of this group. A adequate community-based care stance, that the percentage of the
of-life costs are based on the fee- recent analysis of US health care and supportive services, leaving target population that will be af-
for-service Medicare beneciaries spending revealed that chronic patients with no alternative but to fected by the intervention is 50%
included in the Health and Re- illnesses account for 84% of total access the acute care hospital sys- and that the potential reduction in
tirement Study. We hypothesize health care costs, but the group tem by calling 911 or visiting the costs is 10%, we can compare
that this may have biased our with chronic illnesses is extremely emergency department. between-intervention cost savings,
end-of-life cost estimates toward large.29 Some evidence suggests as shown in Table 1.
higher results, a conservative that the presence of functional ESTIMATED EFFECTS An intervention that targets all
approach for our study and one limitations in conjunction with OF TARGETED individuals with chronic conditions
that may have overestimated the chronic conditions is a better pre- INTERVENTIONS and functional limitations (an esti-
proportion of decedents among dictor of high health care costs than mated 45 million people), affects
the most expensive 5% of the number of chronic conditions In our opinion, our analysis half of that population, and reduces
patients. alone.30 The combination of suggests that identication of the costs by 10% will theoretically
Finally, our cost analyses did chronic conditions and functional appropriate target population for achieve nearly double the reduc-
not include estimates for costs limitations may be associated with high-quality, cost-saving interven- tion in health care costs ($45
such as informal caregiving and higher health care costs owing to tions is critical given the substan- billion vs $27 billion) of an identi-
lost wages. Consideration of these the complexity of care coordination tial variation in the size of different cal intervention that targets only
costs must be included in the across multiple providers and set- target populations, the costs gen- adults aged 65 years and older
context of any new or reformed tings, increased use of specialists erated by different populations, with chronic conditions and func-
health service design, as the eco- and procedures, or an increased and the proportion of the target tional limitations (22 million peo-
nomic implications of these costs likelihood of hospitalization. population likely to be affected by ple). If the intervention targets all

TABLE 1Projected Cost Savings of Hypothetical Interventions for 3 Target Populations

Population Total Cost, Hypothetical Population Affected Potential Reduction in Potential Reduction in
Target Population Size $ (billions) Intervention by Intervention, % Health Care Costs, % Health Care Costs, $ (billions)

All individuals with chronic 45 000 000 909 A 50 10 45

conditions and functional B 50 5 23
Individuals aged 65 y with 22 000 000 543 A 50 10 27
chronic conditions and B 50 5 14
functional limitations
Individuals at the end of life 2 500 000 205 A 50 10 10
B 50 5 5

Source. The percent distributions of populations and costs by age and chronic condition/functional limitation categories were obtained from The Lewin Group ; total population and health care

costs were obtained from 2011 Medical Expenditure Panel Survey data21 adjusted to include the nursing home population.1,20,24

December 2015, Vol 105, No. 12 | American Journal of Public Health Aldridge and Kelley | Peer Reviewed | End-of-Life Care | 2413

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