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August 21, 2007
The 6th World Congress July 10 Plenary: The Value of Life Near its End and Terminal Care
“The Value of Life Near its End and Terminal Care”, the plenary presentation by Tomas Philipson presented at Tivoli Gardens on July 10 for the 6th World Congress: Explorations in Health Economics in Copenhagen, Denmark.
The Value of Life Near its End and Terminal Care
Gary Becker, Kevin Murphy, and Tomas Philipson
NBER Working Paper No. 13333
August 2007
JEL No. I1,I11,I18,I32,I39,J0Abstract: Medical care at the end of life, which is often is estimated to contribute up to a quarter of US health care spending, often encounters skepticism from payers and policy makers who question its high cost and often minimal health benefits. It seems generally agreed upon that medical resources are being wasted on excessive care for end-of-life treatments that often only prolong minimally an already frail life. However, though many observers have claimed that such spending is often irrational and wasteful, little explicit and systematic analysis exists on the incentives that determine end of life health care spending. There exists no positive theory that attempts to explain the high degree of end-of life spending and why differences across individuals, populations, or time occur in such spending. This paper attempts to provide the first rational and systematic analysis of the incentives behind end of life care. The main argument we make is that existing estimates of the value of a life year do not apply to the valuation of life at the end of life. We stress the low opportunity cost of medical spending near ones death, the importance of keeping hope alive in a terminal care setting, the larger social value of a life than estimated in private demand settings, as well as the insignificance in quality of life in lowering its value. We derive how an ex-ante perspective in terms of insurance and R&D alters some of these conclusions.
We are pleased to be able to provide the Powerpoint presentation and paper for download. Our thanks to Gary Becker, Kevin Murphy, and Tomas Philipson.
