How Does Cost Impact Care at the End of Life?

Although Americans are loath to discuss rationing of healthcare, the cost of intensive medical interventions at the end of life is an issue that’s hard to avoid. According to Kaiser Health News, in 2020, Medicare spending was $689 billion, which represented 12% of the federal budget and  20% of the nation’s total healthcare expenditures that year. What’s more, a large percentage of that money was spent during patients’ last six months of life. 

There are several factors that are currently impacting Medicare spending, and unfortunately, they will continue to do so for many years to come. Most importantly, the American population is aging, so the number of Medicare beneficiaries is growing each year. According to Kaiser Health News, there were 63 million people enrolled in the program in 2020 (a number that includes younger people with a qualifying disability), and that number is expected to increase to 93 million over the next 40 years. Further, older Americans are living longer, albeit not necessarily healthier lives. In 2020, the percentage of people over 65 who were in their 80s and 90s was about 25%; that number is expected to increase to one-third over the next 40 years. Not surprisingly, health care spending increases exponentially as people age. 

Another factor that is hugely impacting healthcare spending is the soaring cost of prescription drugs. According to the Congressional Budget Office, nationwide spending on prescription drugs increased from $30 billion in 1980 to $335 billion in 2018. Per capita spending increased from $140 to $1,073. And while that spending reflects a wider availability of many extremely beneficial drugs that have improved many lives, some experts believe these increases are unsustainable over the long term. 

As of this writing, Medicare is legally barred from refusing to pay for a medically necessary treatment due to cost. However, the definition of “medically necessary” is open to interpretation by both private insurers and Medicare and Medicaid. One example: Medicare recently made the controversial decision not to pay for the very expensive and questionably effective Alzheimer’s treatment Aduhelm, which was approved by the FDA under fraught and highly questionable circumstances in June 2021. This was a highly unusual move; Medicare has paid for at least 80% of all FDA-approved drugs and devices in recent years. But as the cost of care continues to rise, it may become more and more common for insurers, including Medicare, to limit the treatments and drugs they will pay for, especially at the end of life.   

Sources

“The Facts About Medicare Spending”. KFF. https://www.kff.org/interactive/the-facts-about-medicare-spending/ 

“Prescription Drugs: Spending, Use, and Prices”. Congressional Budget Office. https://www.cbo.gov/publication/57772