Misconceptions About Health Costs When You’re Older


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Some significant expenses decline as we age: Most mortgages are eventually paid off, and ideally children grow up and become self-supporting.

But health care is one area in which costs are almost certain to rise. After all, one of the original justifications for Medicare — which kicks in at age 65 — is that older people have much higher health care needs and expenses.

But there are a few common misunderstandings about health costswhen people are older, including the idea that money can easily be saved by reducing wasteful end-of-life spending.

Half our lifetime spending on health care is in retirement, even though that represents only about 20 percent of a typical life span. Total health care spending for Americans 65 and older is about $15,000 per year, on average, nearly three times that of working-age Americans.

Don’t expect Medicare to provide complete protection from these expenses.

Traditional Medicare has substantial gaps, leaving Americans on the hook for a lot more than they might expect. It has no cap on how much you can pay out of pocket, for example. Such coverage gaps can be filled — at least in part — by other types of insurance. But some alternatives, such as Medicare Advantage, aren’t accepted by as many doctors or hospitals as accept traditional Medicare.

On average, retirees directly pay for about one-fifth of their total health care spending. Some spend much more.

One huge expense no Medicare plans cover is long-term care in a nursing home.

Over half of retirement-age adults will eventually need long-term care, which can cost as much as $90,000 per year at a nursing home. Although most who enter a nursing home don’t stay long, 5 percent of the population stays for more than four years. You can buy separate coverage outside the Medicare program for this, but the premiums can be high, especially if you wait until near retirement to buy.

Although Medicare is thought of as the source of health care coverage for retirees, Medicaid plays a crucial role.

Medicaid, the joint federal-state heath financing program for low-income people, has long been the nation’s main financial backstop for long-term care. Over 60 percent of nursing home residents have Medicaid coverage, and over half of the nation’s long-term care is funded by the program.

That isn’t because most people who require long-term care have low incomes. It’s because long-term care is so expensive that those needing it can frequently deplete their financial resources and then must turn to Medicaid.

recent working paper from the National Bureau of Economic found that, on average, Medicaid covers 20 percent of retiree health spending. The figure is larger for lower-income retirees, who are more likely to qualify for Medicaid for more of their retirement years.

A widely held view is that much spending is wasted on “heroic” measures taken at the end of life. Are all the resources devoted to Medicare and Medicaid really necessary?

First, let’s get one misunderstanding out of the way. The proportion of health spending at the end of life in the United States is lower than in many other wealthy countries.

Still, it’s a tempting area to look for savings. Only 5 percent of Medicare beneficiaries die each year, but 25 percent of all Medicare spending is on individuals within one year of death. However, the big challenge in reducing end-of-life spending, highlighted by a recent study in Science, is that it is hard to know which patients are in their final year.

The study used all the data available from Medicare records to make predictions: For each beneficiary, it assigned a probability of death within a year. Of those with the very highest probability of dying — the top 1 percent — fewer than half actually died.

“This shows that it’s just very hard to know in advance who will die soon with much certainty,” said Amy Finkelstein, an M.I.T. economist and an author of the study. “That makes it infeasible to make a big dent in health care spending by cutting spending on patients who are almost certain to die soon.”

That does not mean that all the care provided to dying patients — or to any patient — is valuable. Another study finds that high end-of-life spending in a region is closely related to the proportion of doctors in that region who use treatments not supported by evidence — in other words, waste.

“People at high risk of dying certainly require more health care,” said Jonathan Skinner, an author of the study and a professor of economics at Dartmouth. “But why should some regions be hospitalizing otherwise similar high-risk patients at much higher rates than other regions?”

In 2014, for example, chronically ill Medicare beneficiaries in Manhattan spent 73 percent more days in the hospital in their last two years of life than comparable beneficiaries in Rochester.

“There absolutely is waste in the system,” said Ashish Jha, director of the Harvard Global Health Institute. But, he argues, waste is present throughout the life span, not just at the end of life: “We have confused that spending as end-of-life spending is somehow wasteful. But that’s not right because we are terrible at predicting who is going to die.”

Of course, beyond any statistical analysis, there are actual people involved, and wrenching individual decisions that need to be made.

“We should do all we can to push waste out of the system,” Dr. Jha said. “But spending more money on people who are suffering from an illness is appropriate, even if they die.”



More Medicare patients dying at home, JAMA study finds


Dive Brief:

  • More Medicare fee-for-service and Medicare Advantage beneficiaries are dying at home or in community settings than in acute care hospitals, according to new findings published in JAMA.
  • The study showed proportions of fee-for-service beneficiary deaths occurring in an acute care hospital decreased from 32.6% in 2000 to 19.8% in 2015. Proportions of deaths occurring in the home or in a community setting (foster care home, assisted living facilities) increased from 30.7% to 40.1% in the same time span.
  • Medicare Advantage beneficiaries were less likely to be hospitalized overall than those in traditional fee-for-service plans and, in the last 30 days of life, the difference in the hospitalization rates was 9.3% — a difference study author Joan Teno called “huge.”

Dive Insight:

Although most Americans over 65 say that they’d prefer to die at home, in 2009 only 24% of them actually did. Yet, in recent years, more and more Americans are choosing to live out their last days in their home or community instead of being admitted to a hospital.

The JAMA study reveals a potential patient response to the current inadequacy of end-of-life care as, for some older Americans, ending up in a hospital can mean high-cost and aggressive treatment in their final days.

Such treatment does not always equal better care. When it comes to their elderly patients, incumbent healthcare systems increasingly specialize in expensive, often unnecessary services as opposed to a value-based approach.

The findings come on the tide of the so-called “silver tsunami” as the American population skews ever older. The number of Americans aged 65 or older is projected to more than double by 2060, when they will eventually account for 24% of the total population.

New startups have emerged looking to address the institutional inadequacy of end-of-life care, viewing the aging population as a business opportunity. The growing companies zero in on technology-driven solutions in home health, chronic illness and end-of-life care as they look to scale to combat industry issues.

Such startups are a potential wake-up call for traditional healthcare organizations.

“Innovation comes from the private sector,” Teno, a professor of medicine at the University of Washington, told Healthcare Dive.

“I think the implication of this is that hospitals are going to have to change how they’re practicing. They’re going to have to come into new population-based business models that don’t have their entire survival based on their number of admissions,” she said.

On the hospital side, Teno called for multifaceted interventions that address the issue of care overuse and fragmentation in hospitals, such as care bundling and coordination, surveys measuring patient satisfaction and public reporting of readmission rates.

Despite the challenges, Teno was optimistic about study’s implications.

“We’re on the right path,” she said. “We need to wean ourselves off of this fee-for-service world of paying for a procedure and paying for volume, to paying for value.”

“The fee-for-service world provides perverse incentives,” Teno stressed, also noting that it tends to lead to hospital disorganization and miscommunication. 

Teno cited the growth of Medicare Advantage as a program (it accounts for a third of Medicare enrollees and spending), and the 9.3% difference in hospitalization rates between MA and fee-for-service as a good sign for the future of healthcare.


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End-Of-Life Policy Solutions: A Cautionary Note


In a new special issue of Health Affairs focused on health care around the end of life, we see that health care costs rise as patients approach death and/or after they are diagnosed with a life-limiting disease. This relationship holds across many diseases, ages, and types of health care systems and countries. Whether describing the cost-savings associated with palliative and hospice care, training primary care physicians to have conversations about prognosis and care planning, or the need to better understand patients’ preferences for treatment or comfort, most the papers in the issue take an optimistic stance regarding the impact of informed patient choice and transparency. That is, if only the barriers to real communication could be brought down or the proper incentives established, inappropriate care at the end of life would decline dramatically. As I’ll explain, while some optimism may be warranted, there are many forces pulling in the opposite direction.

What all these strategies for better end-of-life conversations have in common is the assumption that if people talked realistically about their prospects and preferences, or if physicians could take the time necessary to explain things clearly, patients and families would come to accept their prognosis and not seek costly treatments; they would avoid intensive care units (ICUs) and accept palliative and hospice care earlier in the end-of-life process. There are significant barriers, however, to shared decision making in the face of unfamiliarity and ambiguity. Simply understanding prognostic predictions requires sophisticated numeracy, which most of us don’t possess. Physicians’ approach to practice and communication style are other important variables that go into the mix.

Over the last few decades, improving advance care planning has been the mechanism widely promoted to ensure that patients receive the type of end-of-life care they want. Whole communities have been the targets of “The Conversation Project,” a program that encourages families to establish an actionable plan for end-of-life care. Since physicians are so often in the position of explaining to their patients what a diagnosis means and what treatment options are available, numerous programs have been directed at improving their communication skills on these delicate topics, all with the goal of reducing the rate of inappropriate end-of-life care. Increased access to palliative care, concurrent with disease modifying treatment, has also been advocated to allow for patients’ gradual transition from costly, aggressive treatments with limited chances of arresting disease progression.

However, it is likely that all physicians have had more than one patient caught in a paradox of understanding their prognosis while not being able to internalize its meaning for their own lives. They continue to live with some degree of denial and make choices as if each new sign of worsening disease is a minor setback or side effect from which they will recover. While this is probably more prevalent among younger patients, families of older patients sometimes play the role of “denier by proxy” — continuing to press for treatment long after health care professionals (and at times the patient) think warranted.

Since stated advance care preferences are acknowledged to be unstable over the course of an illness, physicians are likely to be wary of making assumptions about what patients want as they approach end-of-life health care decisions. Many physicians will remember a surprise remission or recovery and may be loath to propose options that preclude that same opportunity to another patient lest they feel responsible for a terminal phase that could have been delayed. Any indication of patients’ ambivalence might lead physicians to offer treatments that might not be offered were there no ambiguity. Physicians’ fears of foreclosing options may be as great as those of patients and families, so all conspire to do what the other wants.

This natural ambivalence is amplified by very real changes in the effectiveness of treatments for even advanced disease. Even though small and incremental, there are enough examples to shift the tone of the discussion, engendering doubt about patients’ resolution to forego further treatment. Personalized medicine, with molecular or genetic targeting, has achieved some tantalizing successes, raising hopes of patients and physicians alike while complicating discussions about palliative and hospice care.

Perhaps in consideration of this discussion, we should be more tolerant of the slow progress advance care planning has made and the difficulty of getting physicians to have in-depth and definitive conversations about care preferences. It may not just be the inadequacy of the financial incentives or the poor training physicians receive in holding such conversations. Nor is it necessarily the fractionated process of referring patients from one part of the health care system to the other that keeps patients from hospice. Ambivalence, hope, and denial may all serve to alter our willingness to make definitive decisions to stop treatment and to embrace palliative care. This combination can undermine patients’, families’ and physicians’ decisions to pursue palliation and comfort care. This makes it so much easier to fall into the inertia of ongoing treatment, hospitalization, and even ICU admission, particularly in light of the growing availability of such services.

If this is the case, our calculus about cost savings from advance care planning, physician training, and palliative care may not be as large as research suggests. Patients, families, and physicians volunteering to participate in research studies may not be representative of the entire population approaching end-of-life decision making. While research clearly points to a way to reducing inappropriate care at the end of life, in the US, at least, these initiatives are unlikely to put a halt to the relentless rise of disease-oriented treatment at the end of life in the foreseeable future. Financial incentives in our health care system conspire with the legitimate reluctance of patients, families, and physicians to give up hope for life extension.

On the other hand, there is reason to be somewhat optimistic since the changes discussed in this special issue of Health Affairs are prone to make a difference. However, the scope of the difference is likely to leave plenty of room for further interventions, although what types these will be remains to be seen.

Right-To-Die Fight Hits National Stage

Right-To-Die Fight Hits National Stage

WASHINGTON, DC - FEBRUARY 13: Delegate Eleanor Holms Norton (D-DC) talks with Chairman of the House Oversight and Government Reform Committee, Jason Chaffetz (R-UT) before a business meeting at the Rayburn House Office Building on Monday February 13, 2017 in Washington, DC. The "Death with Dignity Act" was discussed in the meeting. (Photo by Matt McClain/The Washington Post via Getty Images)

Opponents of aid-in-dying laws are claiming a small victory. They won the attention of Congress this week in their battle to stop a growing movement that allows terminally ill patients to get doctors’ prescriptions to end their lives.

The Republican-led effort on Capitol Hill to overturn the District of Columbia’s aid-in-dying law could fail by Friday. But advocates worry the campaign will catalyze a broader effort to fully ban the practice, which is legal in six states and being considered in 22 more.

“The D.C. legislation has catapulted the issue of medical aid in dying onto the federal agenda at a time when Congress has the power to enact a ban on this end-of-life care option nationwide — even criminalizing the practice in the six states where this option is currently authorized,” warned Jessica Grennan, national director of political affairs and advocacy for Compassion & Choices, which supports right-to-die laws.

“If that happens, it will set the end-of-life care movement back to the last century,” Grennan said.

No matter how the effort plays out, both sides agree that the debate on Capitol Hill, featuring a Republican moral protest, could be only a taste of what’s to come.



Knowing How Doctors Die Can Change End-Of-Life Discussions


A family portrait of Nora Zamichow, husband Mark Saylor and their daughter, Zia Saylor.



Advance Planning For Your End-Of-Life Care

Advance Planning For Your End-Of-Life Care


Starting in October, Medi-Cal — the state’s version of the federal Medicaid program for low-income residents — began covering advance care planning discussions between doctors (or other qualified providers) and patients (or a family member), said Tony Cava, spokesman for the state Department of Health Care Services, which administers Medi-Cal.

Any Medi-Cal recipient can use the coverage regardless of age, he said. Doctors can bill for the conversation twice a year per patient — plus an additional 30 minutes for one of the conversations — before they have to seek authorization for more coverage.

Medicare, the federal health insurance program for people 65 and older, and for people younger than 65 who have certain disabilities, started covering the discussions on Jan. 1.Medicare does not limit the number of discussions per patient each year.