Working Paper: NBER ID: w31035
Authors: Jonathan Gruber; David H. Howard; Jetson Lederluis; Theodore L. Caputi
Abstract: The Medicare hospice program is intended to provide palliative care to terminal patients, but patients with long stays in hospice are highly profitable, motivating concerns about overuse among the Alzheimer’s and Dementia (ADRD) population in the rapidly growing for-profit sector. We provide the first causal estimates of the effect of for-profit hospice on patient spending using the entry of for-profit hospices over twenty years. We find hospice has saved money for Medicare by offsetting other expensive care among ADRD patients. As a result, policies limiting hospice use including revenue caps and anti-fraud lawsuits are distortionary and deter cost-saving admissions.
Keywords: hospice care; Medicare; Alzheimer's disease; for-profit sector; healthcare costs
JEL Codes: H51; I13; K4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| for-profit hospice enrollment (I11) | Medicare spending (H51) |
| for-profit hospice enrollment (I11) | skilled nursing facilities usage (I11) |
| for-profit hospice enrollment (I11) | home health care usage (I11) |
| for-profit hospice enrollment (I11) | mortality outcomes (I12) |
| regulatory policies (G18) | for-profit hospice admissions (I11) |
| expanding hospice eligibility (I13) | Medicare costs (H51) |
| for-profit hospice enrollment (I11) | total savings (including Medicaid and Social Security) (H55) |