Predictive modeling of U.S. health care spending in late life

By Liran Einav, Amy Finkelstein, Sendhil Mullainathan, Ziad Obermeyer
Science, June 29, 2018


That one-quarter of Medicare spending in the United States occurs in the last year of life is commonly interpreted as waste. But this interpretation presumes knowledge of who will die and when. Here we analyze how spending is distributed by predicted mortality, based on a machine-learning model of annual mortality risk built using Medicare claims. Death is highly unpredictable. Less than 5% of spending is accounted for by individuals with predicted mortality above 50%. The simple fact that we spend more on the sick—both on those who recover and those who die—accounts for 30 to 50% of the concentration of spending on the dead. Our results suggest that spending on the ex post dead does not necessarily mean that we spend on the ex ante “hopeless.”

From the article

In sum, although spending on the ex post dead is very high, we find there are only a few individuals for whom, ex ante, death is near certain. Moreover, a substantial component of the concentration of spending at the end of life is mechanically driven by the fact that those who end up dying are sicker, and spending, naturally, is higher for sicker individuals. Of course, we do not—and cannot—rule out individual cases where treatment is performed on an individual for whom death is near certain. But our findings indicate that such individuals are not a meaningful share of decedents.

These findings suggest that a focus on end-of-life spending is not, by itself, a useful way to identify wasteful spending. Instead, researchers must focus on quality of care for very sick patients—identifying the impact of specific health care interventions on survival rates and, just as importantly, on palliation of symptoms; such research should focus not just on averages but also on potentially heterogeneous impacts across different individuals.…


Cut Spending In Final Year Of Life? MIT Study Finds Death Too Unpredictable

By Carey Goldberg
WBUR, June 28, 2018

Medicare, the federal health coverage mainly for people over 65, spends about $700 billion a year, and it’s estimated that about one-quarter of that spending on seniors goes to health care in the final year of life.

That end-of-life spending has drawn scrutiny as potentially wasteful, involving heroic measures taken even though death looms inevitably.

If health costs must be contained, the argument follows, why not cut that relatively futile end-of-life spending?

The answer, according to a new study that used machine learning on a huge trove of more than 6 million Medicare medical records to train a computer algorithm to predict deaths, is this:

In most cases, it’s not clear that the treatments are futile at the time. Because even with state-of-the-art artificial intelligence, it’s much harder than you might think to predict who’s going to die soon.

Question: So what are the policy implications?

Amy Finkelstein, co-author of the paper: First, it is true that we spend an enormous amount of money on people who die. What our research suggests is it isn’t obvious that that means it’s a waste. The implicit assumption is that we’re spending a lot of money on people we know are going to die in the next year or the next 30 days, and we show in the paper that’s just not true. So don’t focus so much on end of life spending as a symptom of waste, because it’s not obviously waste.

Second, there’s hard work we need to do rather than just point to spending at the end of life and say, “Let’s lop that off.” Instead, we need to figure out which medical interventions and health care policies are actually producing a lot of value and which aren’t. We need to look at specific interventions, both late life and at other points in life, and estimate with rigorous empirical methods what the benefits of those interventions are.

Question: You could do this study because you could use machine learning on great Medicare data, but what actually triggered you to do it?

Amy Finkelstein: Those two factors — and on the more casual or humorous side, I remember picking my son up from ski school, and he told me his instructor said you always need to be careful at the end of the day because most ski accidents happen on the last run of the day. And my immediate response was: “Of course they do, when you have an accident that becomes the last run!”

Obviously, that’s facetious, but it made me start thinking about it. In the ski example, I think the instructor is right. It is actually true that more accidents occur late in the day. But as framed, it sounds absurd in the same way as saying, “Look, we spend a lot on the dying, let’s stop spending so much on the dying.” It’s like, “Stop skiing your last run of the day.”…

When our very high national health care costs are discussed, almost invariably the subject of wasteful spending at the end of life is brought up. This important study of predictive modeling shows that spending at what proves to be near the end of life is not obviously wasteful. It is usually appropriate, testimonials aside. Efforts to reduce spending by reducing end of life care will not be particular productive in management of our national health expenditures.

It is astonishing to see brought up repeatedly the same ill-advised, ineffectual, and sometimes harmful policies to control health spending, such as consumer-directed health care (very high deductibles), paying for value instead of volume (accountable care organizations), or taking away choices in care (narrow provider networks), when we know what does work – a single payer national health program, aka an improved Medicare for all.

Measures that would have a real impact on controlling spending include reduction in our profoundly wasteful administrative excesses, and controlling our “stupid” prices through public administration. Improved allocation of our health care resources through planning and capital budgeting might not make much of a dent in total spending, but it would redistribute funds to more effectively cover those who are currently uninsured or have excessive out-of-pocket health care expenses. Obviously these are beneficial policies that characterize a single payer health care financing system.

Instead of wasting more time and money on the wish lists of the market ideologues, we should move forward with what does work – improved Medicare for all. The good news is that, based on current election results, it appears that the word is getting out.

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