tives that in combination with cultural, legal, and other factors may impede excellent palliative care. As discussed in this chapter, financing mechanisms may encourage or discourage the use of beneficial services and may affect the mix of services, providers, and settings of care available to dying patients and their families.

This chapter examines four major questions asked about the cost of care for those who die. First, who pays for care at the end of life? Second, what is spent on this care? Third, do financing mechanisms create impediments to good care? Fourth, how might costs for care at the end of life be reduced?

Who Pays for Care at the End of Life?

No comprehensive national statistics document in detail the sources of payment for care at the end of life. Nonetheless, it seems clear that dying is, in considerable measure, publicly funded. Because over 70 percent of those who die each year are elderly and covered by Medicare and because thirteen percent of Medicare beneficiaries are also covered by Medicaid, those two programs undoubtedly cover a large proportion of expenses for end-of-life care. In addition to elderly people, others of those who die (e.g., some AIDS patients) are seriously enough disabled or impoverished that they qualify for Medicare or Medicaid or both. Veterans and defense health programs also pay for some end-of-life care. Moreover, some people who die without insurance or other available financial resources—for example, many homicide victims and homeless adults—die in public hospitals.

Notwithstanding Medicare's importance to its beneficiaries, the program does not cover all of their health care expenses. Data from the 1987 National Medical Care Expenditure Survey indicates that for those aged 65 or over who died in 1987, Medicare accounted for 48 percent of health expenditures during the last six months of life (52 percent for noninstitutionalized decedents and 39 percent for those in institutions) (calculated from Table 2 in Cohen, Carlson, et al., 1995). For all beneficiaries, in 1992, Medicare covered barely half (53 percent) of health care expenses with 14 percent, 10 percent, 20 percent, and 3 percent of expenses covered by Medicaid, private insurance, beneficiary out-of-pocket spending, and other sources respectively (Gornick et al., 1996).1


Coverage percentages range from zero for outpatient prescription drugs and 6 percent for nursing home care to 87 percent for inpatient hospital care. Disabled beneficiaries have more of their expenses covered by Medicaid and "other sources" (25 percent and 11 percent) than do aged beneficiaries (12 percent and 2 percent). For those who qualify for federal-state Medicaid, the program is an important source of payment for nursing home care. It pays about 47 percent of all nursing home bills, compared to Medicare's 8 percent (Levit et al., 1996). Patients and families cover most of the rest of the cost of nursing home care (42 percent for aged beneficiaries but 14 percent for disabled beneficiaries) (Gornick et al., 1996).

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