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1993.04.15 :  Study -- Health Care Costs in Last Year of Life

Contact:  Anne Verano (202) 690-6145
April 15, 1993

       Contrary to popular belief, no evidence exists to show
that people in their last year of life account for an
increasingly larger percentage of Medicare expenditures, it was
announced today by the Health Care Financing Administration.
       Rather, a new HCFA study, "Trends in Medicare Payments in
the Last Year of Life," showed that over a 12-year period
decedents consistently account for about 28 percent of Medicare
spending.
       There had been some belief that employing "heroic
measures" to preserve the lives of dying patients had caused a
greater rate of increase.
       But the study showed that spending in the last year of
life, as a percentage of total Medicare expenditures, was--28.2
in 1976, 30.8 in 1980, 26.9 in 1985 and 27.2 in 1988.
       Significantly, the study showed no rise in the percentage
of payments during the last two months of life, a period during
which "heroic measures" might well have been expected to have had
a disproportionate effect on the rise in Medicare costs.
       This led the researchers to conclude that "apparently the
same forces acting to increase overall Medicare expenditures have
affected care for both decedents and survivors."
        The HCFA study noted that, over the period studied,
while..."payments per person (increased) nearly four-fold both
for all aged persons and for decedents...the proportion of total
dollars spent for decedents changed little."
     Medicare per-capita payments during the last year of life
"generally decreased as age of death increased," averaging in
1988 $15,436 for beneficiaries aged 65-69, and $8,888 for those
90 or over.
       The researchers pointed out that this last observation may
reflect less aggressive treatment of the very old, or stem from
the substitution of nursing home care (not generally covered by
Medicare) for hospital care as age increases.
       Annually, about 5 percent of Medicare beneficiaries die,
over half of these in hospitals.
       The 1988 figures also showed that payments for Medicare
survivors rose with age until the 85-89 age group was reached.
       The study, published today in the New England Journal of
Medicine, was conducted by HCFA researchers James D. Lubitz,
M.P.H., and Gerald F. Riley, M.S.P.H. 
       Medicare, which is federally funded, covers about 36
million elderly and disabled Americans.  Expenditures in fiscal
year 1993, which ends Sept. 30, 1993, are expected to reach $133
billion, up from FY 1992's $119 billion.

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EDITOR'S NOTE:  HCFA, an agency of the U.S. Department of
Health and Human Services, directs the Medicare and Medicaid
programs, which help pay the medical bills of 67 million
Americans.  HCFA's estimated fiscal year 1993 expenditures are
almost $230 billion.