Richard Posner’s post at the Becker-Posner Blog is Extending Life, which discusses the very high cost of medical treatment near the end of life. Here is a taste:
The only solution to the problem that I can think of, brutal as it sounds, is to reduce Medicare benefits. If the slack is taken up by increased private spending, well and good; that would just show that the elderly and their families really do place a very high value on trivial extensions of a not very pleasant life. But the slack will not be taken up fully by private spending, because most people have limited financial means. Although hospitals will not refuse emergency treatment to people who cannot pay for it, they will not provide the most advanced treatments to such people. So cutting public benefits would result in a real reduction in medical spending on the elderly. There would be a loss of utility but in my judgment it would be more than offset by the savings to the taxpayer. If my father’s case is typical, expensive efforts to extend the life of elderly people by a few months do not generate proportionate benefits.
Becker comments:
Still, several considerations seriously qualify the conclusion that too much is spent on extending the lives of elderly American men and women. One mentioned in passing by Posner I consider quite important; namely, that the vast majority of people have an enormous fear of death. Given this fear, people try to postpone the inevitable as long as they can, even if that would mean spending much of their own resources on modest extensions of their lives. They would partly spend indirectly by contracting for expensive private health insurance that covers payments even for small life extensions. Old persons would spend less if they did not receive subsidies since the elderly who get sick have fewer resources than taxpayers, but older persons would still spend a sizable fraction of their own resources to extend their lives.
Still, several considerations seriously qualify the conclusion that too much is spent on extending the lives of elderly American men and women. One mentioned in passing by Posner I consider quite important; namely, that the vast majority of people have an enormous fear of death. Given this fear, people try to postpone the inevitable as long as they can, even if that would mean spending much of their own resources on modest extensions of their lives. They would partly spend indirectly by contracting for expensive private health insurance that covers payments even for small life extensions. Old persons would spend less if they did not receive subsidies since the elderly who get sick have fewer resources than taxpayers, but older persons would still spend a sizable fraction of their own resources to extend their lives.
One more thing, children and spouses of the elderly may care very much about the lives of their parent and spouses. Many childern and spouses (but not all) will be willing to spend all of their resources and to exhaust their borrowing power to purchase either a short-time extension of life or the hope (read low-probability expectation) of a miracle recovery. These expeditures have far different social consequences that do similar expenditures by the elderly themselves–and in the case of children may have ramifying effects on the grandchildren and great-grandchildren of the dying elderly patient. Without generous end-of-life social insurance, the children of the elderly will inevitably be forced to make very difficult choices about their own financial well-being and that of their own own children and grandchildren.