The High Cost of Dying

In 2008, Medicare paid $50 billion just for doctor and hospital bills during the last two months of patients' lives. That's more than the budgets of the Department of Homeland Security or the Department of Education.

There's an important distinction to be made here; this spending wasn't geared toward saving lives. All of these patients died within two months.

Such a protocol isn't a matter of prolonging life; it's a matter of prolonging death.

According to Dr. Ira Byock, 18 to 20 percent of Americans spend their last days in an ICU.

Despite the fact that a vast majority of Americans say they want to die at home, 75 percent end up dying in a hospital or a nursing home.

Dr. Elliott Fisher, a researcher at the Dartmouth Institute for Health Policy, says that 30 percent of hospital stays in the United States are probably unnecessary.

The resulting costs are massive.

Overall, healthcare in the U.S. is the most expensive in the world, costing about $2.4 trillion last year.

And government economists expect healthcare costs to account for 17.6 percent of GDP this year.

Part of the problem is that most doctors get paid based on the number of patients they see, and most hospitals get paid for the patients they admit. This amounts to what might be termed a "perverse incentive."

"In medicine we have turned the laws of supply and demand upside down," says Dr. Fisher. "Supply drives its own demand. If you're running a hospital, you have to keep that hospital full of paying patients in order to, you know, to meet your payroll. In order to pay off your bonds."

In essence, the current system often rewards excessive care. Efficacy and outcomes are not rewarded. But excessive care is.

By law, Medicare cannot reject any treatment based upon cost. It will pay $55,000 for patients with advanced breast cancer to receive the chemotherapy drug Avastin, even though it extends life only by an average of one and a half months.

And it will pay $40,000 for a 93-year-old man with terminal cancer to get a surgically implanted defibrillator if he happens to have heart problems too.

On a national basis, the costs are enormous.

Projections released by economists at the Centers for Medicare and Medicaid show health care outlays rising from $2.4 trillion in 2008 to $4.4 trillion by 2018, or 20.3 percent of the GDP.

Comparatively, healthcare costs are considerably less expensive across the industrialized world, ranging from 7.2 percent of GDP in Ireland to 11.6 percent in Switzerland.

The current level of U.S. spending is simply unsustainable.

David Walker, the government's former top accountant, puts it this way:

"The one thing that could bankrupt America is out of control health care costs. And if we don't get them under control, that's where we're headed."