Myth #3: A third of all health care cost is incurred during the last year of patients' lives.

Medicare has reported that it spends nearly 30 percent of its $408 billion budget (2006) on its beneficiaries in their final year of life. That works out to about $122 billion per year in end-of-life care, or about 5% of total health care expenditures. That’s a tidy sum, but not the bank-breaking amount many commentators would have us believe. One can pick nits and say that Medicare's coverage for the elderly and disabled doesn't quite include all deaths, but that doesn't change the basic point that end-of-life care, while expensive, is not taking up the lion's share of our national health care expenditures.

Nonetheless, there is a lot of room for improvement in how America’s hospitals and doctors deal with end-of-life treatment. The amount spent varies tremendously depending solely on which hospital one has--literally--ended up in. The wondrous Dartmouth Health Atlas (http://www.dartmouthatlas.org/) has reported that care provided by Manhattan’s New York University Medical Center to an elderly patient with multiple medical problems during the last two years of life costs $105,000. U.C.L.A.'s Medical Center runs $94,000. Contrast that with Mayo Clinic’s world-renowned teaching hospital in Minnesota that costs only $53,432.

One difference in such outcome variations is apparently due to how well patients--and their families--are informed about options and listened to with respect to how they want to live their final days. Ideally, such fully informed wishes would always trump doctor and institutional proclivities toward extraordinary efforts, but alas, they don't. Incidentally or not, such heroic measures seem to invariably result in greater doctor and hospital revenue.

All this begs the question of how much should we collectively spend on health care at any stage of life, and more important, who should decide? Many pundits, politicians, doctors, and even economists seem to believe this should be answered via our democratic political process, and that it should fall on our elected and civil service officials to make these expenditure decisions for us--as they now do for the elderly, disabled, and poor. That, in my view, is a terrible, dehumanizing approach that runs counter to almost everything we stand for as a country. It removes the individual from decisions that only she can intelligently, fairly make.

Fortunately, we have available a parallel decision-making process by which the national will on health care expenditures can be rationally determined. It is via the expression of individual will through an even more democratic process than the political one--free, transparent, and open markets that allow each person to make his own decisions about how much he is willing to spend on health care and for what. Through this democratic market process—with the inclusion of a substantial safety net component—the collective will can be made known in the form of the grand total of all voluntary, individual expenditures for health care goods and services—just as it is with our even more essential needs of food, clothing, housing, and transportation. In other words, total health expenditures should be an output amount determined by individual decisions, not an input amount pre-established by politicians and bureaucrats--no matter how well-intentioned.

Thus, I pose the question: Which do you trust more, our collective will expressed through individual choice, or the quality of the sausage extruded through the tail-end of the political meat grinder? My fear is that the current national mood may actually favor the latter. Yet my roseate optimism whispers that--despite whatever detours we may take--sooner or later we'll be willing to try even a market-based solution. Sooner would be better.

Copyright 2008 by Stephen S. S. Hyde. All rights reserved. Quotation of excerpts permitted with attribution.