The very word rationing conjures up images of breadlines and bedraggled-looking people clutching coupons for sugar and coffee. It's scary.
And so it's not surprising that in the debate over health care reform—which is really health insurance reform—there’s been a lot of mud-slinging about health care rationing.
But only the truly ignorant would pretend that health care rationing isn’t already part of the fragmented “system” of US health care. Many have tried to set the record straight, as in a June 17, 2009 New York Times article entitled "Health Care Rationing Rhetoric Overlooks Reality."
When it comes to health care, the US already has many layers of rationing. With resources tight, and cost containment a priority, the question is not whether the US will ration care, but how we will do so.
Defining Rationing
To get the terms of the debate clear, rationing is the process of allocating scarce resources among potential users.
In a free market system such as the US, price is effectively the way that goods and services are rationed or allocated. That is, the person who can afford to buy the Ferrari, does, and the person who can’t afford it, doesn’t.
In regulated economics, rationing is achieved through various mechanisms. One mechanism, for instance, is using the logic of first-come-first-served. Another mechanism might be distribution according to some principle of equity, such as on the basis of need. In this case, the government might enact individual or business mandates for purchasing health insurance.
The current US health care system is a pastiche of both free market and regulated mechanisms of distribution. The government regulates Medicare, the popular insurance system for senior citizens. But women who want to get costly preventive services, for instance, trans-vaginal ultrasound scans for cancer, must do so under free market conditions: they pay.
In health care, rationing refers to a pattern of allocating health care resources either because of scarcity (such as a scarcity of medical equipment in an inner city hospital), or in order to contain costs. An example of the former occurred during Hurricane Katrina in New Orleans. An example of the latter would be exclusion of certain products, medications or services from one’s health insurance coverage—something that happens all the time.
All of these interventions are subject to unexpected outcomes, such as a phenomenon known as "moral hazard" (which has nothing to do with a person's individual morals).
Implicit versus Explicit Rationing
Health care may be implicitly or explicitly rationed.
Implicit rationing refers to a situation in which health care is allocated according to unstated principles of market mechanisms. This includes rationing by
- budget - for instance, certain capitated plans don’t allow certain procedures.
- price - when a given procedure is too expensive for popular use, or is not covered by insurance.
- queue - as in the case when there are extraordinarily long waiting times before a given procedure can be done, such as certain transplants.
- administrative barriers - hassles, such as a barrage of complex detailed paperwork demands.
US Already Rations Both Health Care and Health Insurance
The current US health care system is rife with rationing.
For instance, managed care companies have ways to allocate health care, such as prior authorization before a person can obtain a given medical service.
In a September speech before the Joint Session of Congress, President Obama got a standing ovation after detailing catastrophic stories of average Americans whose health care had been delayed or denied by insurance companies.
Triage is a form of emergency rationing of medical care that occurs when there’s natural disasters or war, or in other circumstances when medical resources are scarce. The local hospital emergency room will employ methods of triage — a kind of rationing that many would consider fair—in order to allocate health care services first to those who are in most need.
How, Not Whether, to Ration is the Question
The question at hand is whether to shift our current implicit rationing system to one that is explicit and has broad public approval.
The consequences of the current implicit rationing system are brutal for the millions of uninsured and under insured Americans. It's also expensive, as uninsured individuals often end up in the emergency room, which is the most costly point of entry into the health care system.
The bottom line, in response to those who worry about “government rationing of health care” is that rationing is already deeply embedded in our current system. Nobody decided that it should be this way; the system simply evolved. Is the current system fair? No. Is it cost effective? No. Surely in reforming how Americans get and pay for health care insurance, the nation can do better.
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