Are You Ready for a Glorious Sunset?

In our previous episode, we talked about a set of TV commercials that use behavioral research to sell financial products like life insurance.

Daniel GILBERT: It’s great to think optimistically but let’s plan for whatever the future might bring.

This got us to thinking about how you might sell a different kind of insurance — one that doesn’t even exist yet. And what kind of ad you’d make for it.

Steven LEVITT: Okay, here’s what I would show.

That’s Steve Levitt. He’s my Freakonomics friend and co-author.

LEVITT: I would show a sick old person, but not the way sick old people are usually shown, as being reasonably happy and fit, but what really people who are dying look like: deformed, can’t breathe, suffering deeply. Then, at the bedside, would be a bunch of children in tattered clothing, looking kind of hungry and seeming as if they could really use a college education or something. Then the Voice of God would somehow make the point that another two weeks of pain so bad it distorts your face, lying in bed in a coma, isn’t worth the cost of grand kids not being able to go to college.

So this TV ad might sound something like this:

ACTRESS: We all want to take care of Mom. But the doctor says her treatments might cost hundreds of thousands of dollars. And even so, she’ll never fully recover.  We’ve got two kids to put through college.

NARRATOR: Millions of families are struggling with these same decisions. Now, a new health care plan puts you in control.  You can decide if medical treatments are right for you or your loved one. And if you decide to forego the standard treatment, we’ll put the money directly in your pocket, to use for whatever you need: college tuition, a new house — or to take Mom on one last adventure, to soak up some glorious sunsets.

ACTRESS: Thanks to the Glorious Sunset Healthcare Option, Mom won’t have to suffer — and we can make decisions that make sense for our family.

NARRATOR: Isn’t it time for you to think about a Glorious Sunset? Enroll today.

So what do you think? Is it time for you — for all of us — to think about a Glorious Sunset? On this episode, we will put this idea through its paces and solicit a variety of opinions. From economists:

LEVITT: I love that idea.

To physicians:

Thomas SMITH: It would be a public-relations nightmare.

To physicians who are also public intellectuals:

Zeke EMANUEL: It’s so cold-blooded. It’s so calculating. It’s so utilitarian that it’s not American.

And we hear from you, our listeners:

SEMU: My name is Semu. I’m 40 years old. First, I’d like to know who’s the heartless person who thought of this. Second of all, I think it’s pretty genius, actually.

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The proposal under consideration today comes from a listener who sent us an e-mail.

Timothy PRICE: I’m Tim Price. I am the chief investment officer for a mid-sized public pension fund.

Stephen J. DUBNER: Okay. You want to name the public pension fund for us?

PRICE: I’ve been asked not to.

DUBNER: Ah, okay.

PRICE: Since this is a personal idea and not an organizational idea.

DUBNER: Fair enough. In other words, that’s a good hint that the idea we’re about to discuss is so repugnant that your firm is smart enough to not want to be anywhere near it. I shouldn’t say repugnant, but…

PRICE: Potentially unpalatable.

DUBNER: Potentially unpalatable. That’s a good way of putting it.

Price lives in the Bay Area. He’s in his late thirties. He’s got a wife, two kids.

PRICE: Kids are six and two.

DUBNER: What are their names? I’m just curious.

PRICE: Sure. Calvin and Elliott.

Like I said, we first heard from Tim Price via e-mail. I asked him now to read the e-mail aloud.

PRICE: “Why don’t health insurance companies offer bonuses to patients who are willing to forego standard end-of-life medical care? When a patient receives a terminal diagnosis, I have to believe that the health care companies have actuaries and data sets that would give them guidance on what the next 6-24 months of medical care would cost. For patients willing to skip this type of care, my idea is for a bonus according the following formula: an immediate bonus of approximately 50% of the difference between the actuarial underwriting of standard medical care and hospice or palliative. The patient maintains control over the optionality, but an immediate benefit opens up to them (one last grand vacation, a lasting legacy for the next generation, etc). The health insurer gets an actuarial gain and makes progress towards disincentivizing excessive consumption of health care in the final months of life. Seems like a no brainer to the economist in me (though my sociologist wife thinks I’m completely cold-blooded).”

The idea came up, Price tells us, when he and a few colleagues were doing what they always do at work: kicking around investment ideas.

PRICE: We kept coming back to the idea that, depending on the study you look at, 40, 60, 80% of lifetime medical care is expended in the final twelve months, or the end of life, generally.

And once you go down that road of thinking, you get to an obvious fork:

PRICE: It comes down to this idea of, “Are you optimizing quality of life or are you optimizing quantity of life?” Under the current structure it looks like, from my perspective, you’re optimizing quantity of life as a proxy for quality of life.

DUBNER: How long into this conversation did you realize that a lot of people, when they first hear an idea like this, are just gonna immediately hate it?

PRICE: Pretty much immediately. It touches on a lot of taboos, right? You’re touching on death, you’re touching on money, you’re touching on health care, which is clearly a third rail.

DUBNER: All right, Levitt. How do you like that idea? Surrendering end-of-life care for a cash rebate idea, from the insurance company?

LEVITT: I love that idea. I have so long railed against the spending that we do at the end of life. One thing that’s hard about end of life is someone’s got to decide if it’s really end of life, right? It’s easy after someone dies to say, “That was the last month of their life.” But before the person dies, it’s not so easy to tell. If you leave a decision about end-of-life care up to the government, then the problem is people say, “That’s death panels. That person’s not going to die. We could still save them.” But if the patient himself or herself says, “Look, this is the end of my life. I don’t want this expensive care. I’d rather have the money go to my kids or to charity,” then I think that’s a really brilliant way to get around the natural impulse to fight our concern about not giving people the care they deserve.

DUBNER: If it’s so brilliant, why haven’t we seen it?

LEVITT: For starters, my hunch is it’s probably not legal. Somehow you get into trouble for doing it because there’s a lot of things we don’t let people do. We don’t really let people commit suicide. We don’t let others in most states do assisted suicide. There is this amazing unwillingness for the living to let people who want to die, die. That’s part of the repulsive nature of this program. Many people would hear about it and say, “I don’t like the feeling of that.”

RYAN: My name is Ryan and I’m from South Carolina. Probably if this was enacted it would be a firestorm of negativity from people who weren’t faced with that decision — decrying it as putting a price on human life.

SMITH: There are both legal hurdles and it would be a public-relations nightmare.

DUBNER: That’s Thomas Smith. He’s an oncologist and a prominent cancer researcher. He runs the palliative medicine program at Johns Hopkins Sidney Kimmel Comprehensive Cancer Center.

SMITH: I don’t think Cigna, Aetna, Trigon, really want to deal with that. You’d have to figure to what you would do with the money you would pay the patient. How does it get taxed, state by state? How does it get taxed by the feds? It’s a public-relations nightmare because it looks like the insurance companies are trying to keep people out of the hospital, keep them from getting their chemotherapy, keep them from getting their left ventricular assist device, or artificial heart just to save money. It really is a nightmare.

Uwe REINHARDT: It’s a harder sell because health care isn’t just economics. It’s ethics. It’s partly religious.

And that is…

REINHARDT: Uwe Reinhardt. I teach economics at Princeton University.

Reinhardt is among the most prominent health care economists in the world. He has thought long and hard about the many ways in which health care — which has been creeping toward 20 percent of GDP in the U.S. — is a unique animal.

REINHARDT: It is absurd that people think the market works in health care. As an economist, I say, “How could any market work when the buyers don’t know prices and quality ahead of time?” You go into a hospital, you don’t have a clue what you’ll owe when you come out. You don’t have a clue. They wheel in a machine, “What’s this?” “Echogram.” “How much does it cost?” The nurse says, “How would I know?” Imagine that. You go to a counter and say, “That’s a nice shirt. How much is it?” And the sales clerk says, “How would I know?” But this is how we buy health care.

That’s how we buy health care in large part because consumers often don’t pay the costs directly. They’re paid for by an insurer — a private firm or, in the case of Medicaid and Medicare, a government plan. Once you bundle that lack of transparency with the end of a person’s life — plainly, we’re not just talking economics here. But it’s a good place to start.

EMANUEL: First of all, there is a fair amount of money in end-of-life care.

That’s Ezekiel Emanuel. Not Rahm Emanuel, mayor of Chicago, or Ari Emanuel, co-CEO of William Morris Endeavor. Those are his brothers. This is Zeke.

EMANUEL: I’m vice provost of global initiatives and chair of the Department of Medical Ethics and Health Policy at the University of Pennsylvania.

Emanuel is also a physician who, you may recall, helped the White House formulate the Affordable Care Act, also known as ObamaCare.

EMANUEL: In the Medicare system, about 25, 27 percent of the Medicare budget actually goes to patients who die within the year. It’s big in Medicare. That’s because people who tend to die end to be over 65 and on Medicare. But spending a lot doesn’t mean you can save a lot. That’s where we often get confused. Rather than focus on the dollars and cents, we should focus on patients and families and try to make this traumatic event as smooth and comforting as possible. We haven’t gotten it right. Instead of talking to a patient and getting it right, we pound on their chests and try to resuscitate them, even when that may not be what they want. Trying to get what patients want ought to be our primary focus.

SMITH: When’s the last time you heard about a doctor dying in the I.C.U. with advanced cancer, or advanced heart disease, or advanced congestive heart failure, emphysema?

That’s Tom Smith again, from Johns Hopkins.

SMITH: It doesn’t happen. Because doctors bargain for, “How much good is this going to do me? Is it really worth it?”

EMANUEL: If you look at the data on doctors, most doctors don’t want a lot of these interventions for themselves. There is a paradox here that we do this for patients but when you ask us, “How do we want to be treated?” It turns out, “No, that’s not really for me. Leave me alone.”

DUBNER: How old are you, Dr. Emanuel?

EMANUEL: Fifty-eight.

DUBNER: Fifty-eight. In the Atlantic, you wrote not long ago that you only want to live to the age of 75 and you spell out…

EMANUEL: Well, that’s not exactly what I said.

We should note that the Atlantic article was headlined “Why I Hope to Die at 75.” We should also note that writers often don’t get to write their own headlines. In any case, in the article Emanuel spells out all the things he wouldn’t want done to him: no cancer treatment, no cardiac stress tests, certainly no pacemaker or implantable defibrillator.

EMANUEL: I was like, “If I get to 75 and everything’s still firing, that’s great. But I’m not trying to live forever.” It’s about quality of life. I don’t want all these interventions that are done for the reason of prolonging my life. The reason I don’t want the defibrillator, I wouldn’t take cancer chemotherapy, is they’re for prolonging my life. A number of people have said to me, including my father, he says, “You’ll change your mind.” My father, unlike most people, recognizes that I can be stubborn about these things. He says, “The one thing which is going to change your mind is having grandchildren.” That’s an experience I have not had and maybe he’ll be right. He’s a very smart guy.

DUBNER: How old is your dad?

EMANUEL: He’s 88.

DUBNER: He must have taken this as a little bit of a, “Hey Pops, those last 13 years, you didn’t really need them.” 

EMANUEL: It’s not that he didn’t need them. We’ve had a number of long discussions about this. We don’t agree, on lots of things.

Uwe Reinhardt, the Princeton economist, also has a story about his father. Reinhardt is from Germany, and that’s where his father was diagnosed with pancreatic cancer.

REINHARDT: I called that German physician and I said, “What are you going to do about it?” He said, “Nothing.”I said, “Are you kidding me?” He said, “No, we’ll make him as comfortable as we can, but he will pass away in a couple of weeks.” I called my Harvard friend and told them, “Shouldn’t I fly my dad over here and you guys can do something?” He said, “Yeah, we could do stuff. We could probably buy him another four months, and he’d be in an I.C.U., full of tubes and a lot of pain.” He said, “I could do that, but do you want me to do that?” Then he said, “This gruff German physician actually did you a great favor by simply communicating to you, “Don’t tell me what to do. I’m the doc and I’m telling you for the patient, it is not a quality life worth doing that for.’” Here was this American physician telling me, “He’s a very good doctor because he didn’t put that burden on your shoulder. He took it on his shoulder.”

So this is really the core of Tim Price’s idea, the Glorious Sunset proposal. Just because life can be medically extended, it doesn’t mean that a) it necessarily should be; or b) that the quality of life during that extension is in any way desirable. And yet, if you’ve essentially already bought and paid for all that end-of-life treatment, through your insurance plan, aren’t you entitled to something?

David SCHLESINGER: Hello, my name is David Schlesinger. I am 38 years old, and I live in Oregon, Wisconsin. I would take the cash rebate from the insurance company and I would seek treatment for my condition in a country that had significantly lower medical costs than the United States, possibly India or parts of Europe.

Coming up on Freakonomics Radio: would the Glorious Sunset Plan be just another form of health care rationing?

REINHARDT: A very rich guy who runs a hedge fund wouldn’t even consider that deal because what you’re talking about is maybe 500,000 bucks. It’s just behind a decimal for what these guys are worth.

And: things are changing — subtly, but they are changing — in how our health care system looks at death.

EMANUEL: As I like to say, talking about the end-of-life is the hardest thing a doctor does.

And one more thing: on Monday, Aug. 31, I am launching a new podcast, with my friend James Altucher, a little side project we call “Question of the Day.” James and I sit down and ask each other questions like: “What’s the most useful advice you can give someone in 10 minutes? “What’s the best way to start a conversation with a stranger?” And, “Why do so many people hate the sound of their own voice?” The first five episodes will go up on Aug. 31; after that, we’ll out three episodes every week. That’s “Question of the Day,” on iTunes or wherever you get your podcasts.

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The proposal on the table today — we’re calling it the Glorious Sunset Plan — would allow a terminally ill patient to forego standard end-of-life care in exchange for a cash rebate from his or her insurance provider. A lot of people who listen to this program thought this idea might not work so well:

DIANE: My name’s Diane. I’m 34 and I’m in Chicago. I don’t know how you’re going to get the insurance companies to agree to it and how you smooth out the fine lines of what happens if a particular patient changes their mind or if they get admitted to the hospital while they’re found unconscious or something like that.

Isral DEBRUIN: Hi, Freakonomics. My name is Isral DeBruin and I’m from Milwaukee. When I heard your question, the first thing that I thought about was that there would be some people out there who didn’t really feel like they had much of a choice in the matter and would feel obligated to make the choice to take the cash rebate because of their financial circumstances or their family’s financial circumstances.

REINHARDT: I couldn’t even imagine it because it is another form of rationing health care or life years by income class, right?

That’s Uwe Reinhardt, the health care economist.

REINHARDT: A very rich guy who runs a hedge fund wouldn’t even consider that deal because what you’re talking about is maybe 500,000 bucks. It’s just behind a decimal for what these guys are worth. While if someone were lower-middle class, they would have a very tortured debate around the dinner table, “Should we do this?

DUBNER: Let’s pretend for a minute that you are not an economics professor, but that you are the CEO of a private health care insurance provider. Would you even consider trying to craft a proposal to make this offer to your customers?

REINHARDT: I wouldn’t for the simple reason, “What’s in it for you?” As an insurer, you are passing through the hospital and doctor bills. You get a little margin on them. It’s usually 3-5%. Your incentive is, in many ways, to increase health spending, right? Because then you’ll get your 3% on a higher throughput, which is why these guys traditionally have never regulated or controlled costs at all.

So there’s a lot going against our Glorious Sunset Plan, isn’t there? The economics. The health care rationing argument. But I’d bet that even more people would be turned off by its resemblance — it’s sort-of resemblance, at least — to the infamous death-panel debate.

Sean HANNITY: Ezekiel. Dr. Ezekiel Emanuel.

Glenn BECK: Dr. Ezekiel Emanuel believes that we should calculate the value of a human life and the amount we should spend to keep that life alive.

Megyn KELLY: And he is said to be the architect of Obamacare. He’s a respected doctor but he’s been under a lot of fire since this law was born.

EMANUEL: This is Ezekiel Emanuel.

DUBNER: You were very involved in the formulation of the Affordable Care Act. One of the most controversial issues — whether warranted or not — was the so-called death-panel formulation of the way that end-of-life care would be kind of accounted for and dealt with, and other end-of-life care issues in the Medicare system.

EMANUEL: Well, let me clarify that.

DUBNER: Please do.

EMANUEL: There was never ever in the Affordable Care Act, anything about end-of-life care. It never made it into the draft. There were some ideas floated around and discussions had. People said, “They’re going to introduce death panels into the bill.”

DUBNER: Discussions including on the other side of the aisle, from what I recall, yes?

EMANUEL: Yes. Absolutely. The great irony of the whole thing is that Newt Gingrich had been a long advocate of advanced directives and having doctors talk to patients about advance directives. Johnny Isakson, a senator from Georgia during that time had introduced a piece of legislation exactly like what was being discussed in terms of encouraging doctors to have conversations paying doctors. Sarah Palin, when she was governor of Alaska, had a whole month devoted to getting Alaskans to fill out advanced directives. The Republican Party had always endorsed this until it became convenient to vilify it.

DUBNER: That was then. Now — well, the Centers for Medicare and Medicaid Services has just proposed a regulation that would actually pay doctors to do nothing more than have a conversation with patients about their impending death.

EMANUEL: Talking about the end-of-life is the hardest thing a doctor does. It’s emotionally charged. It’s physically draining. It takes time, and we need to recognize that increasingly these conversations require a lot of skill, as much skill as doing a colonoscopy or doing a surgical procedure. It’s not physical, manual skill. It’s not about dexterity, but it is about something just as important, if not more important. It’s about emotional understanding of patients and it ought to be compensated the way we compensate for other skills and talents.

SMITH: There’s the potential that Medicare will pay doctors like me a fee for spending a really difficult hour talking with patients about end-of-life care.

That’s the oncologist Tom Smith.

SMITH: None of that is trying to get people not to be coded, not to be in the hospital, but just to discern their wishes. Because we can’t honor people’s wishes unless we know what they are; about resuscitation, being on a ventilator, being on dialysis. That’s a start.

Smith acknowledges the potential conflict of interest in how some doctors have historically treated dying patients:

SMITH: We’ve worried that the incentives are misaligned for the use of chemotherapy in the last month of life. Up until recently, oncologists got paid more to give chemotherapy than they did to spend time talking with patients. But when Ronan Kelly and I actually looked at the patterns of chemotherapy use around the world, they were exactly the same. Somewhere between 20 and 30 percent of all patients in Spain, Portugal, Japan, Italy, and the U.S. get chemotherapy in the last month of life. It bore absolutely no relationship to the fact that the oncologist did or did not make money on it. I can’t speak to hospitals, but oncologists like me don’t give chemotherapy to make money.

So as a doctor who’s had to tell too many people that their time has come, and that yes, he can give them some expensive and not very effective and often very punishing drugs, Tom Smith understands where Tim Price, our listener, is coming from, with his proposal to let people opt out and split the unspent dollars with the insurance company.

SMITH: It sounds good on paper. I agree with him that it sounds like it should work.

Smith in fact once toyed with a similar idea, for treating terminal lung-cancer patients.

SMITH: We actually tried to set up an experiment like that back in the mid-1990s when, much like now, the cost of health care — particularly cancer care — were escalating through the roof.

There were two primary options:

SMITH: One was to stay in your regular fee-for-service insurance. The second was to get a capitated indemnity payment.

“Capitation” means the health care provider receives a fixed fee for treating each patient. At the time of Smith’s experiment, it was $18,000.

SMITH: Because that’s what we calculated the average lung-cancer patient would spend on chemo and radiation in the last 12 months of life. It’s triple that now. We set up the trial. The patients who went on the indemnity arm, they’d get the $18,000. They got the best supportive care or hospice care that could be provided. And they would spend the $18,000 on chemo or radiation if they wanted to, or they could keep it and use it for a grandkids’ education, or buy a boat, go on vacation.

Smith was enthusiastic about the idea. But:

SMITH: It didn’t work for a couple of reasons.

The first reason:

SMITH: Our patients were actually interested, but their doctor providers weren’t. It’s pretty hard to look at those two very different choices and decide what to do. It’s very difficult trying to decide first of all, when somebody’s going to die. We are pretty good at making guesses for populations. But for each individual person it can be really hard to tell when they are in a downward spiral and going to die.

There was a second reason:

SMITH: It’s really hard for consumers, also known as people with an illness and their families, to figure out what’s the best treatment for them. We thought it would force doctors and patients to really bargain on either the prices or to bargain on how effective is this. What’s its chance of really shrinking my cancer? What’s its chance of making me live longer? How much longer will I live? What will my quality of life be? Those are all really good questions, and we think those should be asked by anybody contemplating non-curative therapy anyway. These are really tough conversations to have, and when you add in the cost, it gets even tougher.

Tom Smith would propose something completely different.

SMITH: I would propose that doctors be very honest with their patients about what’s gonna happen to them. We’re actually working on a temporary tattoo that goes on the doctor’s inner left forearm and the first question you look at is, “How do you like to get medical information?” Number two is, “What’s your understanding of your situation?” Number three is, “What’s important to you?” Number four is, “What are you hoping for?” And number five is, “Have you thought about a time when you might be sicker? When you might need an advanced directive or living will? “If you have that conversation, it really changes how people pursue end-of-life care. It gets regular people and their families actually behaving the way that doctors do. Because doctors really bargain for, “How much good is this gonna do me? Is it really worth it?”

In Smith’s experience, the failure to talk about death — even with a patient who is plainly dying — is a big problem. He’d like to see more widespread palliative care — that is, easing the symptoms of serious illness, either parallel to or instead of treating the illness itself.

SMITH: It turns out, if you get palliative care involved early — like at the start of a diagnosis of advanced cancer, at the start of bad heart failure, at the start of when somebody needs a heart transplant — the whole scenario changes. People have better pain and symptom management, their families are remarkably less distressed. They end up living longer. That’s right, living longer, not shorter. A good side effect is that most end-of-life hospitalizations are avoided. People really don’t come to the hospital because they want to. They come to the hospital because it’s three o’clock on a Thursday night and their loved one is short of breath or having pain, and they don’t know what to do. How much better it would be if you could have had a palliative care team available to them? A hospice nurse come out [to] see them on Tuesday at four o’clock in the afternoon, adjust their pain medicines, adjust their shortness of breath medicines, so they didn’t need to come to the hospital. That’s one way that you can reduce health care costs substantially in the last month or two of life while actually improving care.

For a lot of reasons, Tom Smith cannot sign off on Tim Price’s proposal.

NARRATOR: Isn’t it time for you to think about a Glorious Sunset? Enroll today.

Because it’s not just about medicine, or economics, or ethics or religion, even politics. It’s about all of them, and more.

SMITH: These are really tough decisions. Trying to do what Mr. Price says would be very difficult. His sociologist wife has it right. It’s too hard to choose. It’s much better if we define a set number of treatments for each disease, have external bodies rather than individual doctor. Patient[s] decide what’s good quality of care, start monitoring ourselves, start providing the best care that we can based on actual measurements rather than based on what we think, and hold ourselves accountable. It’s going to to get more difficult with the amazing increase in cost of drugs. Some of the new drugs are two and three times what they’ve ever been before. That would exhaust most medical savings accounts very quickly. It’s time for us as a society to figure out how much we should be spending on cancer at the end-of-life versus curative cancer therapy, heart disease therapies  — and for my pediatrician wife — making sure that every kid gets a good head start, making sure that every kid gets their vaccinations, making sure that we give people a decent chance to succeed in this life.

Tim Price, for his part, still thinks the idea has merit.

DUBNER: I’m gonna ask you to envision a horrible scenario that involves you and your death. You can handle it or no?

PRICE: I can handle it.

DUBNER: All right. You’re in your late thirties, you said. You have two young kids. Six and two, correct? I hate to even say this because it feels like it’s tempting fate, but I don’t really believe in that. Let’s say — God forbid, everybody forbid, whatever you believe in forbid — that you, Tim Price, are diagnosed with something like lung cancer, okay? Tomorrow. You’re told that you have six months to live. You’re told that, with the available treatments, you might have nine months to live. Let’s say those are the numbers. You’re not paying for those treatments. Those are covered, theoretically, by your insurance. But I say to you, Tim, if you decide to forgo that standard treatment I, the insurance provider, will essentially split the cost with you.

PRICE: You certainly have to take a look at what the difference in your life would be with treatment and without. What the probability is that those additional months are going to be what I would consider to be valuable months? Am I going to be able to be with my family, be with my sons, get more out of it? Or am I going to be incapacitated and not able to engage and interact with my family? Versus what would those additional dollars allow me to do today, over the next couple of weeks, over the next couple of months? I don’t know if I would do it or not. But I know that I would like the option of doing that. Of having that conversation with my wife and thinking about kind of the legacy I want to leave for my family. That would be a long and difficult conversation. Your life is yours, but a little bit belongs to everybody you interact with.