Death and Dignity: Terminal Illness and the Market for Non-Treatment

Posted: 1 Jan 2001

See all articles by Margaret M. Byrne

Margaret M. Byrne

Government of the United States of America - Houston Veterans Affairs Health Service Research and Development Center of Excellence

Peter Thompson

Georgia Institute of Technology - Scheller College of Business

Abstract

We construct a stochastic model of illness, death and treatment choice to analyze two proposals -- legally-binding advance directives and insurer-paid compensation schemes -- to reduce the incidence of aggressive and possibly futile end-of-life treatment. We assess whether, in a competitive insurance market, the proposals are consistent with (i) individual rationality in selection of competitive insurance contracts; (ii) medically ethical treatment provision; and (iii) reductions in end-of-life expenditures. We conclude that binding advance directives are always medically unethical, while compensation schemes are medically ethical. We derive the compensation schedule arising in a competitive equilibrium, and show that it reduces aggressive treatment and satisfies individual rationality.

Keywords: Health care; Quality of life; Health insurance; Terminal illness; Health expenditures

JEL Classification: I3

Suggested Citation

Byrne, Margaret M. and Thompson, Peter, Death and Dignity: Terminal Illness and the Market for Non-Treatment. Available at SSRN: https://ssrn.com/abstract=252723

Margaret M. Byrne

Government of the United States of America - Houston Veterans Affairs Health Service Research and Development Center of Excellence ( email )

VAMC (39A), Research 110T
2002 Holcombe Boulevard
Houston, TX 77030
United States

Peter Thompson (Contact Author)

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St., NW
Atlanta, GA 30308-1149
United States

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