Please turn on JavaScript

Brooks Wilson's Economics Blog: End of Life Health Care

Tuesday, February 23, 2010

End of Life Health Care

One issue in the health care debate has focused on end of life expenditures.  Some argue that too much money is spent to extend lives short periods of time.  Philip Moeller of U.S. News and World Report describes research that gives a counter argument in "End-of-Life Medical Spending Not So Wasteful." 
However, new research from four economists challenges conventional thinking. I don't pretend to be able to follow the math in their arguments but if it supports their logic, then perhaps we ought to re-evaluate the way we look at end-of-life healthcare spending. The economists are Tomas J. Philipson, Gary S, Becker, Dana Goldman, and Kevin M. Murphy. Goldman teaches at the University of Southern California and is a senior economist at the RAND Corp. The other three are at the University of Chicago. All of them have impressive backgrounds, including a Nobel Prize won by Becker, and a John Bates Clark Medal, awarded to Murphy in 1997 as the nation's most outstanding young economist. Their paper was published by the National Bureau of Economic Research.

Up to a quarter of all healthcare spending occurs at the end of life, they note by way of introducing the topic. "However, though many observers have claimed that such spending is often irrational and wasteful," their paper says, "little explicit analysis exists on the incentives that determine end of life healthcare spending."

In providing such analysis, they conclude, among other things, that each year of life is not worth the same. Later years are actually more valuable. "A substantial amount of spending on futile care is rational when there is little-to-no value of leaving wealth behind," they say, and this is in fact how people behave near the ends of their lives. Thus, the value of an additional year of life rises substantially as people get older. People's perception that wealth has no use to them after they die makes them willing to spend much if not all of their wealth to extend their lives. "The value of a life year equals total wealth when the alternative is death and decreases as you get further from there," the economists write. "By contrast, traditional valuations typically assume that the value of a life-year is constant."
I don't have a problem with people sending their money on themselves.  I doubt anybody does.  Should we care if people near death spend taxpayer money to extend their lives?

1 comment:

  1. I have a problem with people spending taxpayer money in many ways that the government chooses to hand it out. In this particular case, I can see the logic that a person's value of life would increase if they were near death. What is not taken into consideration is the QUALITY of life. To me, being "near death" implies that a person's health has deteriorated to a point where he or she would not be able to fully enjoy the taxpayer's money to extend his or her life.