THE "R" WORD -- RATIONING!

John Lantos, MD
June 19, 2009

Milton Friedman said, famously, that there is no such thing as a free lunch.

That’s true. The real question in health care rationing is related, but different. Who gets to eat and who pays the bill?

Health care financing in the United States is largely based upon a system by which everybody feels that they aren’t paying, even though our health care costs are far higher, per capita, than in any other country in the world. They are about 30% higher than in every other industrialized country.

We are all paying for a lunch that is not only not free but in fact is vastly overpriced. But because nobody brings us the check, it feels free.

Our health care is paid for by insurance that is either funded by taxes or taken out of our paycheck by our employers (and that is also funded by taxes – that is, by tax exemptions) or, if we don’t have money or health insurance, we get health care that is funded by either taxes, in public hospitals, or by cross-subsidization from overcharging people who do have insurance.

The whole system is so fiendishly complicated that we spend 20% of our health care dollars just paying administrators whose job is to try to get more of those collective dollars flowing into their organization and fewer flowing out.

Health economist Uwe Reinhardt long ago elaborated on Friedman’s culinary analogy, and described the political debates over health reform as really being about “Table Manners at the Health Care Feast.”

He suggested that, in all discussions of rationing, we should ask not what sorts of medical treatments will be allocated to which patients but, instead, what sorts lifestyles will be allocated to which health care providers. That is still a useful way to think about the debates about rationing.

If we cut the costs of our health care system, someone will get less of something than they do now. Who will it be, and how much of what will they get less of? As always, the goal of our convoluted political discourse is to make it as hard as possible to answer those questions.

Link: Health Care Rationing Rhetoric Overlooks Reality, New York Times, June 17

Calling Rationing what it Is

John Lantos, MD
John B. Francis Chair in Bioethics
December 5, 2008

One of the best articles ever written on health policy and rationing is by Princeton health economist Uwe Reinhardt. His 1981 paper, “Table manners at the health-care feast: 'regulation' vs. 'market',” suggests that we will never understand health policy until we call things by their proper names.

Reinhardt proposes that, instead of speaking about “national health care expenditures,” we should instead discuss, “national health care incomes.” “Increased efficiency” becomes “reduced employment.” “Cost containment” becomes “income containment.”

By this tongue-half-in-cheek shift in terms, Reinhardt highlights the ways in which the health care industry is different from other industries.

In the rest of the economic world, growth is good. Companies try to maximize revenue (that is, maximize expenditures on their product) in order to maximize income. Only in health care is growth seen as bad, and that is only because all industrialized countries view health care as a special sort of good, one to which we all have some entitlement.

This leads to the two central questions of health policy everywhere: 1) how equal the entitlement will be? And, 2) to what, exactly, are we entitled?

Equality can be limited on the basis of age, disability, prognosis, gender, location (i.e. rural vs. urban or suburban) or ability to pay. Scope of coverage can be limited by an almost infinite array of considerations. The most common, and most ethically defensible, is cost-effectiveness.

Rationing treatments based on cost-effectiveness can either be done systematically, as they do in England, or on an ad hoc basis, as we do here. Peter Ubel described – and defended - the American approach in his 1995 paper in the Annals of Internal Medicine called, “The unbearable rightness of bedside rationing: physician duties in a climate of cost-containment.”

Most bioethicists reject Ubel’s approach and argue for something like the British approach, with its admirable honesty, transparency, and accountability. The United States health system has resisted such approaches, however, and never heeded Reinhardt’s call for better “table manners.”

Instead, everyone grabs whatever he or she can get. Perhaps with the strains on our economic system and the reformist mood in Washington, the stars are aligned to allow a new approach. If so, Britain’s National Institute for Health and Clinical Excellence (NICE) might show us the way.

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Links:

British Balance Gain Against the Cost of the Latest Drugs, New York Times
December 2

Physicians' Role in Cost Containment, Virtual Mentor, American Medical Association, November 2003.