Racial and Ethnic Differences in End-of-Life Costs: Why Do Minorities Cost More Than Whites?

Background  Racial and ethnic minorities generally receive fewer medical interventions than whites, but racial and ethnic patterns in Medicare expenditures and interventions may be quite different at life's end.

Methods  Based on a random, stratified sample of Medicare decedents (N = 158 780) in 2001, we used regression to relate differences in age, sex, cause of death, total morbidity burden, geography, life-sustaining interventions (eg, ventilators), and hospice to racial and ethnic differences in Medicare expenditures in the last 6 months of life.

Results  In the final 6 months of life, costs for whites average $20 166; blacks, $26 704 (32% more); and Hispanics, $31 702 (57% more). Similar differences exist within sexes, age groups, all causes of death, all sites of death, and within similar geographic areas. Differences in age, sex, cause of death, total morbidity burden, geography, socioeconomic status, and hospice use account for 53% and 63% of the higher costs for blacks and Hispanics, respectively. While whites use hospice most frequently (whites, 26%; blacks, 20%; and Hispanics, 23%), racial and ethnic differences in end-of-life expenditures are affected only minimally. However, fully 85% of the observed higher costs for nonwhites are accounted for after additionally modeling their greater end-of-life use of the intensive care unit and various intensive procedures (such as, gastrostomies, used by 10.5% of blacks, 9.1% of Hispanics, and 4.1% of whites).

Conclusions  At life's end, black and Hispanic decedents have substantially higher costs than whites. More than half of these cost differences are related to geographic, sociodemographic, and morbidity differences. Strikingly greater use of life-sustaining interventions accounts for most of the rest.

Racial and ethnic disparities pervade US health care.^1-9 Many studies show blacks and Hispanics receiving fewer medical services and spending less than whites. For example, minorities receive fewer cardiac procedures, prescriptions for life-saving medications, and narcotic medications for pain relief. Despite efforts by policy makers to address these disparities, they persist.^5,10 At the end of life, however, this pattern may be reversed.¹¹ Several studies have found higher Medicare costs and service use for nonwhites at life's end.^2,12-16 These studies examined differences in sociodemographic and geographic factors as contributors to these disparities. Shugarman et al¹⁴ reported that in the 2 years before the last year of life, spending by blacks was significantly lower. However, in the last year, this deficit “flipped”; estimated final-year spending was 19% higher for blacks than for whites (P = .10). They did not study Hispanics.

In analyses restricted to Medicare Part A (hospital bills) and hospital referral regions (HRRs) with substantial numbers of blacks, several studies by researchers at Dartmouth Medical School, Hanover, New Hampsire, have attributed most of black-white cost differences to geography: basically, more blacks live in regions with high hospital use.^2,15 However, even after geographic differences were controlled for, costs in the last 6 months of life remained 29% higher for blacks than for whites.²

To better understand the racial differences in end-of-life care and to extend comparisons to Hispanics and other minorities, we constructed a national random sample of nearly 160 000 Medicare decedents, oversampled for nonwhites. We tallied all Medicare costs (Parts A and B) in the final 6 months of life and quantified the effects on racial and ethnic cost differences of a range of factors, including age, sex, preexisting comorbidities (from the penultimate 6 months), cause of death, geography, and socioeconomic indicators, as well as markers for conservative or aggressive use of end-of-life interventions (eg, hospice, intensive care unit [ICU], or ventilator use).

Among the 1.76 million Medicare beneficiaries aged 66 or older who died in 2001, we selected 241 655, including random samples of 85 000 each for blacks and whites and for all Hispanic (approximately 30 000) and other minority (approximately 42 000) decedents. To ensure complete health and health care records, we required enrollment in “traditional” fee-for-service Medicare, for which services were individually billed throughout 2000, with both Medicare Parts A and B entitlement (for inpatient and ambulatory care) continuously for 12 months preceding death, as well as a positive match in the National Death Index. We excluded beneficiaries in the end-stage renal disease program and those residing in Puerto Rico or other nonmainland territories, because care for these groups is administered quite differently than for others in Medicare. After these exclusions, there were 158 780 decedents in the analytic sample. The proportions excluded among Hispanics (55%) and others (47%) were much higher than among whites (24%) and blacks (32%), principally owing to the exclusion of residents of Puerto Rico, to the high rates of non–National Death Index match for Hispanic decedents, and to the higher rates of Part B coverage among whites.

Our primary outcome is total Medicare-covered health care expenditures at the end of life: specifically, in the 180 days (6 months) preceding death. For each beneficiary, we added Medicare-allowed payments for all covered services, including hospital and skilled nursing facility care, hospice and home health services, physician services, and durable medical equipment purchases. We also examined intermediate outcomes, such as total costs by type of service, and any use of hospice or selected life-sustaining procedures, such as ventilators.¹¹

Covariates included age, sex, race, total morbidity burden in the penultimate 6 months of life, geographic location, and socioeconomic status, as well as direct concurrent contributors to, or proximate causes of, final 6-month costs, such as cause of death, hospice use, and receipt of specific, intensive life-sustaining procedures. Age, sex, and race were obtained from Medicare's denominator file, using its racial/ethnic categories of white, black, and Hispanic, grouping everyone else into “other,” which included Asian (37%), North American Natives (8%), other (32%), and unknown (33%). Socioeconomic status was proxied by (1) median income of the patient's zip code of residence, and (2) whether the patient received Medicaid assistance (buy-in) to pay Medicare Part B premiums. Morbidity burden was summarized using (1) the Charlson comorbidity score and (2) a Diagnostic Cost Group prospective relative risk score (DxCG version 6.1 for SAS Windows). Each score was based on International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), diagnoses recorded during the 6 months preceding the last 6 months of life.^17,18 The Charlson score assigns points to 19 disease conditions; scores in these data range from 0 to 37. The DxCG software organizes all ICD-9-CM codes into 184 “condition categories” and summarizes their expected impact on future expenditures via a relative risk score (RRS); an RRS of 1.00 refers to average expected next-year expenditures among all Medicare beneficiaries (not just decedents) observed for 1 year. Because the choice of morbidity measure did not affect estimates of racial/ethnic differences, we report analyses using only the more predictive RRS.

To see the effect of aggressive end-of-life care on differences in expenditures, we used surgical procedure codes and other markers in the Medicare inpatient file during the last 6 months to identify decedents with any (nonpsychiatric) ICU admission, and each of 10 intensive life-sustaining interventions: cardiac catheterization, implantation of a cardiac assistance device, pulmonary artery wedge monitoring, cardiopulmonary resuscitation or cardiac conversion, gastrostomy, blood transfusions, dialysis, and use of mechanical ventilators, intravenous antibiotics, and cancer chemotherapies.¹³ We identified these procedures using the clinical classifications software (CCS) of the Agency for Healthcare Research and Quality, excluding carotid sinus stimulation (code 99.64); finally, we identified chemotherapy use from diagnoses and procedures, as described elsewhere.¹⁹

We examined differences in expected costs by where decedents had lived, in 3 ways. First, we classified the county of residence descriptively, using Beale rural-urban continuum codes to distinguish “metropolitan counties by size and nonmetropolitan counties by degree of urbanization and proximity to metropolitan areas.”²⁰ We also mapped the zip code of residence into Dartmouth Atlas–based HRRs and hospital service areas (HSAs). The 306 HRRs are aggregations of more than 3000 HSAs that distinguish geographic regions whose residents access the same hospital(s) and physicians.²¹ We rely principally on models that use HSA (as so-called fixed effects indicators), because each HSA defines a small geographic cluster of persons who typically rely on the same hospital systems. In a sensitivity analysis, we quantify the modest differences associated with coding place of residence by county, HRR, or HSA.

We used STATA version 9.2 for all analyses, which are weighted to adjust for oversampling of nonwhites.²² We summarized outcome and covariate variables for all Medicare decedents and compared them by race and ethnic group (using χ² and analysis of variance to test for differences). We used regression to estimate differences by race/ethnicity in total end-of-life expenditures after accounting for differences in covariates. Models successively added covariate sets: age and sex only (model B); underlying cause of death determined from death certificates and morbidity (using RRSs) in the 6 months before the final 6 months (model C); geography (using HSAs, model D); socioeconomic status (model E); hospice use (model F); and use of the ICU and 10 intensive procedures during the end-of-life period itself (model G). The order in which explanatory variables are added affects the size of the contribution attributed to each. We first adjusted for pure patient characteristics (age, sex, and medical problems) and then for geographic and socioeconomic indicators. We included geography early in the sequence to focus on differences by race among (otherwise similar) persons who face the same health care delivery systems.²³Finally, we examined differences in the use of specific services only after all these factors that might otherwise confound associations between race and procedure use had been accounted for. For example, to the extent that nonwhites use more aggressive interventions because they have the same utilization patterns as their white neighbors, we wanted that to be attributed to geography. By entering utilization variables last, the estimated effects focus exclusively on cost differences that arise because nonwhites have different utilization patterns than their neighbors. We also explored the effect of sequencing on the apparent importance of different sets of variables.

Because of large sample sizes, racial/ethnic differences are almost always statistically significant at the P < .05 level. Therefore, we only explicitly remark on it when race and ethnic differences are not significant.

Among the 158 780 decedents, blacks and Hispanics were younger than whites and more often lived in metropolitan areas with a population of more than 1 million (Table 1). The cause of death was similar across racial groups. However, the site of death differed, with blacks and Hispanics dying more often than whites in hospitals and less often in nursing homes.

Black and Hispanic decedents have significantly higher end-of-life Medicare Parts A and B expenditures than whites (Table 2). White decedents average $20 166 in the last 6 months of life; blacks, $26 704 (32% more); and Hispanics, $31 702 (57% more). These racial disparities persist within strata defined by age, sex, morbidity-burden level, and cause and site of death. End-of-life expenditures for blacks are significantly higher than for whites in almost every state (Figure 1) and in cities as well as rural areas (Table 2). Interestingly, several southeastern states have both the lowest overall spending and the smallest black-white differences in cost; cost disparities were largest in urban areas, where more minorities live and end-of-life costs are also high for whites. Specifically, the average end-of-life expenditures in the largest metropolitan areas are $24 700 for all races; in areas with population numbering 250 000 to 1 million, they are $18 700; and in rural areas, they are $17 100. Finally, these racial and ethnic cost differences occur in each of the last 6 months of life (Figure 2).

In Table 3, we quantify the importance of various factors on these raw cost differences by sequentially controlling first for demographic, health, and geographic variables. Model A shows the raw differences in costs for the last 6 months of life among the racial and ethnic groups. Blacks' costs are $6538 higher than whites' costs; Hispanics' costs are $11 536 higher, and other minorities' costs are $5307 higher.

Model B controls for age and sex. These 2 factors reduce the cost differences between blacks and Hispanics and whites by about 10%. Model C also controls for morbidity burden and cause of death and reduces these differences by another 7% to 9%, with nearly all of the reduction attributable to morbidity burden. Using the Charlson index instead of the DCG morbidity measure produced very similar reductions.

Additionally accounting for place of residence by including HSAs in model D brings unexplained extra costs down to only $2924 for blacks (together eliminating 55% of the raw difference for blacks), $3705 (eliminating 68% of the raw difference) for Hispanics, and $2103 (eliminating 60%) for decedents of other races. Using either HRR or county as the geographic unit instead of HSA in model D yields similar findings. Adding socioeconomic indicators (zip code, median income, and Medicaid buy-in) yields very modest further reductions in cost differences by race and ethnicity (model E). In total, between 55% and 68% of the raw differences in end-of-life expenditures between whites and the other 3 groups are accounted for by differences in demographics, morbidity, geography, and socioeconomic indicators, with geography contributing the largest part.

Most of the remaining racial and ethnic differences in end-of-life costs can be attributed to differences in the use of hospital-based, life-sustaining interventions (Table 4). Blacks and Hispanics are significantly more likely to be admitted to the ICU (32.5% for blacks, 39.6% for Hispanics, and 27.0% for whites). Minorities also receive significantly more intensive procedures, such as resuscitation and cardiac conversion (4.4% of blacks, 4.0% of Hispanics, and 2.7% of whites), mechanical ventilation (18.0% blacks, 21.0% Hispanics, and 11.6% whites), and gastrostomy for artificial nutrition (10.5% blacks, 9.1% Hispanics, and 4.1% whites). In contrast, whites are slightly more likely to receive inpatient cancer chemotherapy (7.9%) than either blacks (7.6%) or Hispanics (7.4%) and are more likely than blacks, but not Hispanics, to receive cardiac catheterization, cardiac balloon assistance devices, and pulmonary artery pressure measurements.^5,9

Hospice is used more frequently by whites (26%) than blacks (20%) or Hispanics (23%) and is associated with an average reduction in end-of-life expenditures of $784 per beneficiary overall (model F, Table 3). However, differential hospice use has essentially no effect on racial and ethnic differences in end-of-life costs (model F).

Finally, controlling for the use of all 10 life-sustaining interventions, such as ICU admissions, ventilators, and gastrostomies (model G), eliminates more than half of the remaining differences between whites and each of the other groups (Table 3). Of the original $6538 excess cost for black over white decedents, only $997 (15%) remains after this final adjustment, while for Hispanics, only $1902 (16%) of the original $11 536 in excess costs over whites remains “unexplained.” Most of the life-sustaining interventions are associated with strikingly higher total costs. For example, among otherwise similar persons, those who use the ICU cost $12 000 more than those who do not; the use of gastrostomy adds $22 800, and mechanical ventilation adds $15 200.

This study of nearly 160 000 Medicare decedents and their total Medicare (Parts A and B) costs in the last 6 months of life shows substantial differences by race and ethnicity. While there are differences in the magnitude of their cost differences with whites, all 3 groups of nonwhite decedents are similar to whites in their causes of death, but they incur substantially higher Medicare expenditures. In each group, before differences in specific services used are considered, the largest part (between 38% and 58% across the 3 nonwhite groups) of the total excess cost over whites is explained by geography. After all other factors are controlled for, the use of aggressive end-of-life interventions, such as ICU care, ventilators, and gastrostomies, accounts for between 21% and 33% of the difference in total end-of-life costs. Differences in hospice use contribute little to racial and ethnic differences in total end-of-life costs, both because estimated savings from hospice are small (less than $800) and because differences in use by race are modest (20% for blacks, 23% for Hispanics, and 26% for whites).

Using a large and nationally representative sample that linked Medicare data with cause-of-death data from the National Death Index, this study confirms and extends findings regarding black-white differences in costs at the end of life. Raw costs of health care in the last 6 months of life are 32% higher for black Medicare beneficiaries than those for white decedents. Our findings contrast with those of numerous non–end-of-life studies in which minorities received fewer services and especially fewer technologically intensive interventions.^1-10 Medicare expenditures for Hispanics were even higher: fully 57% higher than for whites.

Because racial and ethnic differences in cause of death are minimal, they do not contribute to racial differences in end-of-life costs. However, geography is very important, whether measured as HRR, HSA, or county of residence. Blacks and Hispanics are far more likely than whites to live in large urban areas, where medical care in general, and end-of-life care in particular, is more expensive than in smaller cities and rural areas. In part, Medicare costs for black and Hispanic decedents are higher because more of them live and die in higher-cost locations. However, even within the same geographic locations, black and Hispanic decedents have notably higher end-of-life Medicare costs than their white neighbors. In contrast to previous studies, our method of using indicators for each geographic unit instead of area-level measures, such as county hospital beds and physician supply, adjusts not only for measured geographical factors related to variations in practice patterns but also for unknown, and therefore unmeasured, factors.^2,23

Despite the cumulative importance of age, sex, cause of death, geography, morbidity burden, and socioeconomic status on decedent costs, 45% of the excess costs for blacks and 32% of the excess costs for Hispanics are not explained by these factors. Most of this residual difference is accounted for by more end-of-life ICU admissions and life-sustaining interventions for nonwhites. Black Medicare decedents are significantly more likely to receive resuscitation, mechanical ventilation, and gastrostomy for artificial feedings than are white decedents, even when they reside in the same HSA or county.¹¹ Hispanics are even more likely than blacks to receive ICU care, mechanical ventilation, dialysis, and cardiac catheterization.

While black, Hispanic, and other minority decedents receive more intensive life-sustaining interventions at the end of life, blacks receive less cancer chemotherapy, cardiac catheterization, and other aggressive cardiac interventions, such as balloon assistance devices, than whites. The lower level of cardiac and oncologic interventions for blacks may be because such interventions require access to subspecialists—oncologists and cardiologists—with whom blacks may have fewer prior relationships. It is not clear why the same is not true for Hispanics. Indeed, why blacks, Hispanics, and other minorities receive so much more of many intensive, life-sustaining interventions now emerges as an important area for further research.

Differences in the use of aggressive end-of-life interventions may reflect patient preferences.^24-26 Some studies have found minorities to be (1) more reluctant than whites to have do-not-resuscitate orders, (2) more likely to prefer life-sustaining treatments at the end-of-life, and (3) less likely to use hospice.^27-35 Such differences in preferences and use of high-technology interventions at the end of life are in contrast with other life stages, in which whites get more intensive interventions.¹⁰ Even if such racial preferences are real, they are not a “first cause”; they raise important policy issues.

Are health care resources for nonwhites misallocated over a lifetime, with racial and ethnic minorities receiving fewer life-extending and life-enhancing interventions than whites throughout their lives^1-10 but more at the end, when there is less opportunity to improve the quantity and quality of life? Perhaps the use of aggressive, hospital-based interventions at the end of life is a well-considered preference. However, even if such interventions are a choice, the decision to use them may stem less from settled views than from distrust of the medical care system or from economic constraints.¹⁰ Nonwhites who receive timely, effective care throughout their lives may find it easier to reject cardiac resuscitation, mechanical ventilation, and artificial nutrition at the end.^36,37 We also know that blacks receive lower-quality primary care^38,39 and fewer preventive services than whites.^38-40 Perhaps not having a usual source of care and an established relationship with a physician does not allow for an expression of preferences for less intensive treatments at the end of life. Indeed, we found in this Medicare population that more primary care visits just before the last 6 months of life are associated with lower costs and less hospital use at the end of life.⁴¹

This study has limitations. First, the Medicare claims files contain few clinical descriptors. The findings may not generalize to Medicare managed care, to patients without Medicare coverage, or to patients who do not self-identify as black or Hispanic. Previous work has indicated that sensitivity of Medicare data in identifying minorities is good for blacks but less so for Hispanics.⁴² But specificity (the proportion of identified minorities correctly classified) is high for both. The Hispanic effect that we found on end-of-life costs pertains directly only to mainland Hispanics identified as such in Medicare's database. Percentage reductions in racial and ethnic expenditure differences attributed to individual covariates are only rough guides to their relative importance, especially because how a variable affects a model depends on what other factors have previously been accounted for. Nonetheless, the primacy of “geography” and “aggressive interventions” in accounting for differences in end-of-life costs is a robust finding. Medicare expenditures do not capture all health care expenditures, especially pharmaceuticals and long-term nursing home costs, which may displace some hospital care. Medicare data also do not capture the resources expended by private or government supplemental insurers or financial or in-kind support from families.⁴³ Importantly, we had no direct data on patient preferences for the various interventions at the end of life. While the models control for most other variables known to influence medical service use—age, sex, race, geography, cause of death, and morbidity burden—patient preference, overt or covert racism in how the same providers treat patients, and differences in which providers and systems of care are accessed might all contribute to these differences in health care system use at the end of life.

In conclusion, blacks and Hispanics die of similar causes, but the costs involved in their last 6 months of life are substantially higher than those of whites. Although 40% to 60% of these excess differences are associated with geography, ie, living in high–medical-expenditure areas, substantial differences remain, even after adjustment for many patient characteristics in addition to geographic variables. Strikingly higher rates of use of intensive end-of-life treatments such as ICU and ventilators account for most of these residual differences. Therefore, at life's end, minorities often receive more expensive but not necessarily life-enhancing care. It is unclear how much of this was actively sought, or the extent to which racial and ethnic differences are principally driven by how choices are presented or how they are “heard.” These would be fruitful questions for future research.

Correspondence: Ezekiel Emanuel, MD, PhD, Department of Clinical Bioethics, Bldg 10, Room 1C118, The Clinical Center, National Institutes of Health, Bethesda, MD 20892-1156 (eemanuel@nih.gov).

Accepted for Publication: July 21, 2008.

Author Contributions: Dr Hanchate had full access to all the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis. Study concept and design: Hanchate, Young-Xu, Ash, and Emanuel. Acquisition of data: Hanchate, Young-Xu, and Ash. Analysis and interpretation of data: Hanchate, Kronman, Young-Xu, Ash, and Emanuel. Drafting of the manuscript: Hanchate, Kronman, and Ash. Critical revision of the manuscript for important intellectual content: Hanchate, Kronman, Young-Xu, Ash, and Emanuel. Statistical analysis: Hanchate, Young-Xu, and Ash. Obtained funding: Emanuel. Administrative, technical, and material support: Hanchate, Kronman, Young-Xu, and Ash. Study supervision: Hanchate and Ash. Arranged for use of Centers for Medicare & Medicaid Services data: Ash and Emanuel.

Financial Disclosure: Dr Ash is cofounder of, and consulting senior scientist at, DxCG Inc, a company whose software was used to measure morbidity burden in this study.

Funding/Support: This study was supported by contracts with the Department of Bioethics of the Clinical Center of the National Institutes of Health.

Role of the Sponsor: The funding agency had no role in the design and conduct of the study; in the collection, management, analysis, and interpretation of the data; or in the preparation, review, or approval of the manuscript.

Disclaimer: The ideas and opinions expressed are the authors' views. They do not represent any official position or policy of the National Institutes of Health, the Public Health Service, or the Department of Health and Human Services.