Health care costs during the last 12 months of life in Israel: Estimation and implications for risk-adjustment

Accumulating research shows that decedents' costs are high, they increase towards death, and they comprise a large proportion of total lifetime costs. The objectives of this paper are (i) to examine the Israeli pattern of medical care cost during the 12 months prior to death by gender, age, and chronic conditions, and (ii) to examine the implications of the results for the Israeli risk adjustment scheme. For the first objective, we used 12 month follow-up data on a cohort of decedents. For the second objective, we supplemented the data with a cross-section of enrollees (survivors and decedents in 2004). With regard to the first objective, we found that the broad Israeli patterns of cost match previous studies from other countries. With respect to the second objective, we argue that since the cost during the last 12 months of life is very high and is concentrated among relatively few persons, in order to prevent any adverse incentives caused by the combination of age-based risk adjustment and segmentation of end-of-life health care, death should be introduced into the existing retrospective risk-sharing arrangement.