The Town That Adopted “Death Panels”

NPR’s consistently excellent Planet Money podcast had a story this week, titled “The Town That Loves Death,” about La Crosse, Wisconsin. In La Crosse, 96% of people have living wills, which described a person’s desired level of care should they become ill or incapacitated. Nationally, about 50% of people have living wills. The high rate in La Crosse is due to a local medical ethicist who helped create hospital protocols and a general culture that emphasized the importance of having a living will.

La Crosse is also notable for having the lowest Medicare reimbursement rate per enrollee in the Dartmouth Atlas of Healthcare, 26% lower than the national average. As the story notes, “one quarter of healthcare spending is on the last year of life.” While La Crosse’s low Medicare costs can’t all be explained by the prevalence of living wills, it’s an important factor, especially because people, when given a choice in advance care planning, often choose to opt out of invasive and expensive treatments at the end of their lives.

This story gets at two important facts about healthcare:

Our healthcare system creates incentives for increased spending: Officials from the hospital in La Crosse note that this advance care planning program, by reducing the number of procedures they can bill to Medicare, actually costs them money. The current system gives incentives to doctors and hospitals to order more tests and procedures. You would think that the insurance company (either a private company or the government) would have incentives to cut down costs, because they’re being stuck with the bill. There has been some effort at this: the introduction 0f health maintenance organizations (HMOs) under the Nixon administration was an attempt to allow insurance companies to manage care and control costs, but most data says this effort failed. With encouragement from Obamacare, some insurers are moving toward prospective payment systems (as opposed to fee-for-service systems), that provides lump sums to hospitals to provide care for patients. Hospitals have incentives to keep costs low in order to maximize profits (or minimize loses) for each patient.

Cutting healthcare spending means rationing care: Obamacare originally included money to pay for advance care planning. This section of the act was twisted into Sarah Palin’s famous “death panels,” and this bad press meant it was dropped from the bill that was adopted. Everyone likes to talk about eliminating inefficiencies from the healthcare system, and some of that is possible, but to dramatically slow the increase in spending will require harder choices about what care is necessary and what care is extraneous. Republicans like to talk about entitlement reform, and with good reason: entitlements represent a large part of the federal budget. In 2012, federal insurance programs (Medicare, Medicaid, and CHIP) represented 21 percent of the federal budget. But if reducing the deficit means entitlement reform, entitlement reform will be rationing healthcare services. For politicians of all parties, but especially budget-slashing Republicans, it’s easier to cut spending from programs that serve constituents with limited political clout, like the poor and unemployed, than from programs like Medicare with powerful lobbies. Cutting food stamps will only get us so far. Providing people a choice about how they live their final days, while an uncomfortable topic, is both ethically sound and good policy.