Health care costs have grown faster than the U.S. economy for most of the past 50 years. Costs are on a trajectory to account for nearly 20 cents out of every $1 spent by 2020.
Therefore, it was a stunning development when the Congressional Budget Office estimated Medicare spending would be $1,000 lower per beneficiary in 2014 and $2,400 lower in 2019, compared with 2010. The $1,000 in savings translates to $50 billion in savings overall.
It is not entirely clear why Medicare costs are dropping. Experts point to the fact that hospitals have reduced unnecessary readmissions within 30 days of discharge, and changes in how the federal government pays hospitals and physicians because of the Affordable Care Act.
But hospitals also are making greater use of palliative and hospice care at the end of life, which may be one of the biggest factors driving the drop in Medicare costs. Palliative care is about managing symptoms – such as pain, nausea, insomnia and loss of appetite – that accompany disease or treatment. Unlike hospice, palliative care can be employed while attempting to cure a disease. One out of four patients experience significant and needless pain during their last two years of life.
Many people – including some clinicians – confuse palliative and hospice care. Non-hospice palliative care addresses symptoms regardless of prognosis. Hospice is a subset of palliative care for those who are believed to be in their last six months of life. About 25 percent of Medicare dollars are spent on the last year of a beneficiary’s life. Most patients do not want aggressive, expensive care in their last days, and hospitals are beginning to deliver those services appropriately.
According to Robert Fine, M.D., clinical director of the Office of Clinical Ethics and Palliative Care for Baylor Scott & White Health, Baylor University Medical Center at Dallas’ Medicare costs are 20-25 percent lower than at comparable hospitals, and he said his program is a significant factor in that. The Baylor Dallas palliative care program is considered one of the best in the nation.