At first glance, spending a lot of money at the end of people’s life doesn’t make sense. From an economics perspective, the “return on investment” is less, since one may have been able to spend the same money earlier in life to prolong survival. Further, for any given treatment, these treatments are often less effective for the elderly due to competing risks from other commodities.
Nevertheless, I will make the case that patient preferences indicate that high spending on end of life care is justified.
Research from Becker et al. (2007) and Philipson et al. (2010) argue that patient value of life extensions towards the end of life is high because (i) wealth–apart from a bequest motive–has no utility to a dead individual therefore, and thus on life extensions has near zero opportunity cost (ii) similarly–because of limited opportunity cost–improvements in quality of life at the end of life are also highly valued augmenting WTP for end-of-life care, (iii) there may be an altruism argument for providing care at the end of life, particularly as many may feel that denying people medical care at the end of life is cruel, and (iv) treatments may provide hope to people which may be valued independently of actual efficacy. Further, previous studies often ask healthy people how much they would value some fixed amount of life extension at the end of life, but these individuals truly do not have the frame of reference to answer for those currently receiving end of life treatment.
These points are fine to make in theory, but do individuals willingness to pay (WTP) for treatments at the end of life cover their cost? A paper by Fischer, Tesler and Zweifel (2018) argues that there are a number of testable implications:
- The farther away from the time of death individuals are,the smaller their WTP for extending life. Conversely, individuals close to death exhibit high individual WTP that cannot be inferred directly from valuations by those far away from it.
- WTP for an extension of life increases with ‘hope’, i.e. the chance of survival thanks to end-of-life treatment.
- Individual WTP is close to wealth when the probability of dying without treatment is 100 percent.
- Sufficiently strong altruism of contributors combined with moderate altruism on the part of beneficiaries causes societal WTP to exceed its individual counterpart
- Societal WTP may well exceed individual WTP given sufficiently strong societal aversion against denying access to new end-of-life care.
The authors generate 8 additional testable hypotheses, which they also test using a discrete choice experiment survey of 1,529 adults in Switzerland. One part of the survey asked people to choose different treatment options for those with terminal cancer using an ex-ante perspective; the other part asked respondents what they would do under these circumstances. In the individual scenario respondents compared treatments that differed across dimensions of average survival time, quality of life, and chance of being cured. In the social insurance setting, respondents choose between different mandatory social health insurance, which differed based on their coverage of end-of-life treatment. These treatments varied along the following dimensions: age group, average survival time, quality of life, chance of being cured, and treatment cost.
With respect to the 5 propositions above, the authors find that:
- The farther away from the time of death individuals are,the smaller their WTP for extending life is largely confirmed, as people valued a 6 month survival gain more if they had 3 months to live compared if they had 6 months.
- Value of hope is confirmed: The WTP for a one percent chance of being cured (‘Hope’) is US$ 43,321
- Although Becker and Philipson believed that people would be willing to pay near 100% of their wealth for survival gains when dying is a near certainty, the authors did not test this since they did not know people’s wealth.
- The authors also confirm that societal WTP for end-of-life treatment is higher than that from individual responses for both proposition #4 and #5 above.
In short:
In all, four of the five predictions derived from Becker et al.(2007) and Philipson et al. (2010) are supported by experimental evidence; one could not be tested due to lack of data on wealth.
Sources:
- Barbara, Fischer, Telser Harry, and Zweifel Peter. “End-of-life healthcare expenditure: testing economic explanations using a discrete choice experiment.” Journal of health economics(2018).
- Becker, Gary, Kevin Murphy, and Tomas Philipson. The value of life near its end and terminal care. No. w13333. National Bureau of Economic Research, 2007.
- Philipson, Tomas J., Gary Becker, Dana Goldman, and Kevin M. Murphy. Terminal care and the value of life near its end. No. w15649. National Bureau of Economic Research, 2010.