We have performed a simple calculation to determine the End of Life Costs, EOL, for Medicare patients and we present the analysis and results below.
The analysis starts with the following assumptions which are based upon current data:
Number People (000) 310,000
Health Care costs ($B) $2,529
Number Medicare (000) 44,950
Percent Population in Medicare 14.5%
Medicare Costs ($B) $517
Medicare per Year per person ($) $11,500
No Non Medicare (000) 309,483
Non Medicare Costs ($B) $2,012
Non Medicare per year ($) $6,500
Lifetime Medicare (years) 12
End of Life Medicare $66,500
% End of Life 48.2%
Medicare as % Total 20.4%
Thus we see that Medicare spends over 48% of the total on the EOL costs and currently Medicare is just over 20% of all health care costs.
The first chart below shows the percent of EOLl as a fraction of the total Medicare costs versus the expected lifetime after 65. This shows that if people live longer than the percent decreases. This is a result of the assumption that they are generally well until their last year. We have assumed that the expenses per year for Medicare and non Medicare remain as they are at present.
We now present the second analysis. This is the Medicare costs as a percent of total health care as a function of the lifetime after 65. As expected it grows substantially.
This analysis using the data available demonstrates several factors. First the wisdom of the "urban legend" that 75-90% of all health care costs are in the last year of life are just wrong. At worst the percent of Medicare alone is never above 50% and that is based solely upon a smaller base. The actual percent of lifetime total costs is less than 12% assuming constant dollars.
The analysis starts with the following assumptions which are based upon current data:
Number People (000) 310,000
Health Care costs ($B) $2,529
Number Medicare (000) 44,950
Percent Population in Medicare 14.5%
Medicare Costs ($B) $517
Medicare per Year per person ($) $11,500
No Non Medicare (000) 309,483
Non Medicare Costs ($B) $2,012
Non Medicare per year ($) $6,500
Lifetime Medicare (years) 12
End of Life Medicare $66,500
% End of Life 48.2%
Medicare as % Total 20.4%
Thus we see that Medicare spends over 48% of the total on the EOL costs and currently Medicare is just over 20% of all health care costs.
The first chart below shows the percent of EOLl as a fraction of the total Medicare costs versus the expected lifetime after 65. This shows that if people live longer than the percent decreases. This is a result of the assumption that they are generally well until their last year. We have assumed that the expenses per year for Medicare and non Medicare remain as they are at present.
We now present the second analysis. This is the Medicare costs as a percent of total health care as a function of the lifetime after 65. As expected it grows substantially.
This analysis using the data available demonstrates several factors. First the wisdom of the "urban legend" that 75-90% of all health care costs are in the last year of life are just wrong. At worst the percent of Medicare alone is never above 50% and that is based solely upon a smaller base. The actual percent of lifetime total costs is less than 12% assuming constant dollars.
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