Why is End-of-Life Spending So High? Evidence from Cancer Patients
The concentration of healthcare spending at the end of life is widely documented but poorly understood. To gain insight, we focus on patients newly diagnosed with cancer. They display the familiar pattern: even among cancer patients with similar initial prognoses, monthly spending in the year post diagnosis is over twice as high for those who die within the year than those who survive. This elevated spending on decedents is almost entirely driven by higher inpatient spending, particularly low-intensity admissions, which rise as the prognosis deteriorates. However, even for patients with very poor prognoses at the time of admission, most low-intensity admissions do not result in death, making it difficult to target spending reductions. We also find that among patients with the same cancer type and initial prognosis, end-of-life spending is substantially more elevated for younger patients compared to older patients, suggesting that treatment decisions are not exclusively present-focused. Taken together, these results provide a richer understanding of the sources of high end-of-life spending, without revealing any natural “remedies.”
We thank seminar and conference participants at Princeton University, University of Pennsylvania, the American Society of Health Economists meeting, and the World Congress of the Econometric Society. Dan Zeltzer acknowledges financial support from the Pinhas Sapir Center for Development. Avichai Chasid, Michael Leshchinsky, and Joseph Rashba provided excellent research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.