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Posner: Medicare and Last Year of Life Costs
Young people find it strange that such a large fraction of overall medical expenses is incurred in the last few months of life—that is, by people who are dying. (Last-year-of-life medical care accounts for 26 percent of Medicare expenditures and 22 percent of all medical expenditures. PubMed. ) Having nothing to look forward to, why are they willing to spend so much on a meager extension of life? There are several reasons.
- One is that a good deal of end-of-life medical care is devoted to reducing suffering rather than to extending life.
- Another reason is uncertainty as to whether one is really dying.
- Another is that the (private) cost of care, however extensive, is negligible for persons who are covered by both Medicare and private “medigap” insurance that pays for the copayments that Medicare requires.
- Still another reason for the heavy loading of medical expenses at the end of life is that for people who do not have a strong bequest motive, the opportunity cost of money spent in their last period of life is negligible because they will not be able to spend any money saved during that period.
