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How Much Does Hospice Reduce Direct Healthcare Spending By Families?

How Much Does Hospice Reduce Direct Healthcare Spending by Families?

The Journal of the American Medical Association recently published a first-of-its kind study quantifying the healthcare cost reductions families realize after choosing hospice.1 The goal of hospice is to provide comfort and dignity while also supporting families in end-of-life care. The goal is not to affect cost of care. Indeed, use of hospice is currently considered to be an indicator of high-quality end-of-life care.2,3 Nevertheless, it is helpful for patients, families, care planners, and legislators to know how different care options affect cost. In April, 1800HOSPICE™ reported that hospice lowers healthcare spending more than $11,000 per patient. That research adds to a growing body of evidence measuring Medicare claims to show how home hospice reduces healthcare spending by thousands of dollars per patient.4-7 The newest study in the Journal of the American Medical Association stands out for being the first to estimate specifically how families are affected.   

Medicare Pays 100% for Hospice

Because original Medicare pays 100% for hospice, it has been widely assumed that home hospice reduces spending for families. In most instances, families have no deductible to meet, no co-pays, and no cost-sharing of any kind. This covers more than the visits. Original Medicare’s hospice benefit covers other items related to the hospice diagnosis and care as well. These include medical equipment such as a hospital bed, medical supplies, medications, and months of bereavement care.

Current Research into Patient Expenses During Hospice

Nevertheless, some experts have wondered if taking a family member home for hospice care somehow transfers some healthcare costs onto families. Therefore, Melissa Aldridge, PhD, (Icahn School of Medicine at Mount Sinai) and her research colleagues used the Medicare Current Beneficiary Survey to estimate family spending. These surveys are conducted in person, three times per year, with the patient or a proxy. The team was able to compare 2,113 patients who died with hospice care with 3,351 patients who did not receive hospice. They broke down results by time frames: 3 days, last week, last 2 weeks, last month, last three months, and last six months.    

How Much Does Hospice Reduce Direct Healthcare Spending by Families?

Families saw their highest cost savings if they received one month of hospice services: $670. That’s a 75% reduction in out-of-pocket expenses. Families who received less than a month of hospice saved less. Compared to insurance spending, the cost reductions may seem small. However, one should keep in mind that nearly a quarter of Americans have Medicaid when they die. To qualify for Medicaid, people may not exceed a maximum allowable monthly income. Six hundred and seventy dollars represents nearly 40% of the maximum monthly income allowable for Medicaid. For most people, that amount of savings is about half their monthly income.


Based on the normal hospice benefits, it has long been assumed that hospice reduces spending for families. The research recently completed by Dr. Aldridge and her colleagues provides the most direct evidence ever that hospice reduces healthcare spending for everyone, even individual families. The $670 reduction realized after one month can be an important amount for a large percentage of Americans.


  1. Aldridge MD, Moreno J, McKendrick K, Li L, Brody A, May P. Association between hospice enrollment and total health care costs for insurers and families, 2002-2018. In JAMA Health Forum 2022 Feb 4 (Vol. 3, No. 2, pp. e215104-e215104).
  2. Institute of Medicine. Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life. 2014. Accessed June 17, 2022.
  3. Aldridge MD, Bradley EH. Epidemiology and patterns of care at the end of life: rising complexity, shifts in care patterns and sites of death. Health Affairs. 2017 Jul 1;36(7):1175-83.
  4. Huo J, Lairson D, Du X, et al. Survival and cost-effectiveness of hospice care for metastatic melanoma patients. The American Journal of Managed Care. 2014; 20 (5): 366-373.
  5. Christakis N, Iwashyna T, Zhang J. Care after the onset of serious illness: a novel claims-based dataset exploiting substantial cross-set linkages to study end-of-life care. J Palliat Med. 2002; 5: 515-529.
  6. Rice DR, Hyer J, Diaz A, Pawlik TM. End-of-Life Hospice Use and Medicare Expenditures Among Patients Dying of Hepatocellular Carcinoma. Annals of Surgical Oncology. 2021 Sep;28(9):5414-22.
  7. Taylor Jr DH, Ostermann J, Van Houtven CH, Tulsky JA, Steinhauser K. What length of hospice use maximizes reduction in medical expenditures near death in the US Medicare program?. Social Science & Medicine. 2007 Oct 1;65(7):1466-78.