The Relationship of Proximity to Death and Health Spending

It is well-established and intuitive that people have more health expenditures as they age and prior research has shown that those expenditures tend to spike as patients near death.  The obvious explanation is that older people, especially those nearing death, have more disease.  Research in the Journal of Health Economics explores these interactions.   (JHE Article)   The authors conducted the study using English data, creating two groups of about 40,000 patients each.  The first group had used inpatient health care in the 2005 financial year and died by the 2011 financial year.  The second group had died in the 2011 financial year and had inpatient care at some point since the 2005 year.  Thus, seven years of data was basically examined for each group.  The researchers were specifically interested in whether time to death itself accounted for increased health expenditures, or whether it was merely a proxy for greater morbidity near the end-of-life and that the increased disease burden was the direct cause of more spending.  Of interest to policymakers is whether as people live longer they either don’t incur larger health spending over their lives, because greater disease burden doesn’t appear until roughly the same amount of time prior to death, or do they incur more spending because they are sicker for a longer time.  It could even be that the current cohorts of people will be healthier than prior ones as they age, leading to less total spending, although that seems unlikely given the prevalence of obesity and other poor health behaviors.

The authors focused on hospital care because it was very rich in the UK data and because it is a major proportion of all health spending.  In the general analysis, health care expenditures, as expected, did increase with age, quite sharply.  But when those who died within the study period are separated out from those who did not, decedents’ health spending is rather flat to slightly declining from age of death 50 to age of death 100.  Among survivors, a similar effect is seen where spending at age 50 declines somewhat to age 60, then climbs slightly to age 90.   But the closer someone is to death, particularly in the period from just over a year to death, spending jumps rapidly; in fact in the last year of life it triples.  On the surface it would appear that health spending has a substantial relationship to age, but when the analysis includes morbidity, most of that apparent relationship disappears and morbidity becomes the dominant cause of higher health spending as people age.  The implications are that keeping people healthy as they age can be a key strategy in minimizing health expenditures and that if we can reliably identify people who likely are entering the end stage of life, efforts to encourage palliative, not intensive care, will also aid in keeping spending down.