“Rationing” is not a rational objection

There are two dictionary definitions of the verb ration in which one person directly affects the consumption of another.

1. to supply something equitably.
2. to control the amount an individual can use.

The first definition means to give something for free and It would be odd to object to this.  In fact, we have folk sayings that admonish people who ungrateful about getting a gift: never look a gift horse in the mouth, and beggars can’t be choosers. But healthcare is different.  People frequently object to the rationing of free healthcare that is provided by governments and insurers.

The second definition of ration is when the government restricts you from buying something with your own money such as when the US government issued ration coupons for necessities like foods, fuels, and clothing.  Even the richest man in America was legally forced to limit his consumption of gasoline, tires, sugar, meat, cheese, coal, shoes, and many other basics due to rationing.  Today the government rations drugs in this manner.  The government requires prescriptions for purchasing medicine and a prescription is like the WWII ration coupons for gasoline and butter.

Today one of the common criticisms of government financing of healthcare is that the government should not ‘ration’ healthcare.  For example, Forbes published a critique by Scott W. Atlas, MD which objected to government funding of healthcare because of rationing:

government can forcibly reduce the expenditures on medical services by only two methods: 1) restricting the use of medical services, and 2) lowering the payment for such services. And regardless of what Congress and the administration may claim, ultimately, these two boil down to one: the “R word”–direct or indirect rationing of medical care.

Critics like Scott Atlas who complain about government ‘rationing’ of health care don’t mean the second definition of ration; that the US government will block you from buying health care with your own money.  They are complaining about the first definition of ration; that the government will supply free healthcare equitably.  Scott Atlas goes on to complain that the free healthcare won’t be funded generously enough and uses this as an argument in favor of eliminating government funding entirely.  That is odd reasoning.

We do not call it ‘rationing’ when the government funds other services.  For example, when a government-run school system cuts their music program we do not say that the government is rationing music.  If the government music program is not good enough, parents can still buy music lessons privately.  It is the same way with healthcare and it is odd to criticize the idea of expanding health insurance as being a form of increased rationing, but many critics do just this.

True, the government often does restrict the medical services that the government will pay for (no medical marijuana, for example), but this is not really rationing because it does not prevent anyone from spending their own money for legal medical services at any price.  This is a far cry from real rationing like the US government did during WWII.

Perhaps the real reason healthcare providers, like the doctor quoted above, complain about rationing is out of self-interest. The government has a lot of bargaining clout to reduce market prices.  Whenever the government funds free healthcare, most citizens decide that the free government care is good enough and few people spend their own money to buy more of something that the government already provides.  Many healthcare providers have justifiable fears that more government involvement in healthcare will mean lower incomes.  That would feel like rationing indeed.  David Leonhardt argues that most people who use the word ‘ration’ to criticize healthcare policies are being disingenuous.

…the case against rationing isn’t really a substantive argument. It’s a clever set of buzzwords that tries to hide the fact that societies must make choices.  In truth, rationing is an inescapable part of economic life. It is the process of allocating scarce resources.

People like Leonhardt have broadened the definition of rationing to incorporate all of economics.  Economics is often defined as the study of the distribution of scarce resources.  In other word, it is the study of rationing.  Economists primarily focus on studying markets and in healthcare markets, as James Hamilton says, “If… you don’t have the money yourself to pay for it, then you do not receive the treatment.”

This is sometimes called ‘price rationing’, and it is just the way free markets work.  They ration goods according to people’s ability to pay.  It is just everyday life under capitalism.  If I don’t have enough money to pay for a Porsche, then the market will ‘ration’ it away from me in favor of someone with more money.

Some form of rationing is a feature of every medical system.  For example, all medical treatments are legally rationed by medical doctors whose services are rationed by licensure.  Triage is the emergency room’s protocol for rationing immediate care according to need.  Human organs are rationed according to a formula of expected benefit rather than according to ability to pay.  Whenever there is non-price rationing, there is also usually a black market where richer people pay bribes to get more than their ration.  Illegal payments sometimes help people get organ transplants faster.  Only a small minority of Americans, like a textbook author I use (Froeb), thinks that human organs should be allocated by free market price rationing rather than by medical benefit.

In addition to price rationing and prescriptions, David Leonhardt (mentioned above) points out three more ways that our healthcare system imposes rationing upon us.

The first is the most counterintuitive, because it doesn’t involve denying medical care. It involves denying just about everything else.  The rapid rise in medical costs has [taken money away from everything else in life].  …Research by Katherine Baicker and Amitabh Chandra of Harvard has found that, on average, a 10 percent increase in health premiums leads to a 2.3 percent decline in …pay. Victor Fuchs, …and Ezekiel Emanuel, …published an article in The Journal of the American Medical Association last year that nicely captured the tradeoff. When health costs have grown fastest over the last two decades …wages have grown slowest, and vice versa.

So when middle-class families complain about being stretched thin, they’re really complaining about rationing. Our expensive, inefficient health care system is eating up money that could otherwise pay for a mortgage, a car, a vacation or college tuition.

The second kind of rationing involves the uninsured. The high cost of care means that some employers can’t afford to offer health insuranceand still pay a competitive wage. Those high costs mean that individuals can’t buy insurance on their own.

The uninsured still receive some health care, obviously. But they get less care, and worse care, than they need. The Institute of Medicine has estimated that 18,000 people died in 2000 because they lacked insurance. By 2006, the number had risen to 22,000, according to the Urban Institute.

The final form of rationing is …the failure to provide certain types of care [like cheap, effective preventative care], even to people with health insurance. Doctors are generally not paid to do the blocking and tackling of medicine: collaboration, probing conversations with patients, small steps that avoid medical errors. Many doctors still do such things, out of professional pride. But the full medical system doesn’t do nearly enough.

That’s rationing — and it has real consequences.

Leonhardt wrote the article to advocate for comparative effectiveness research.  Any comparative effectiveness research impacts healthcare providers’ incomes because it is the search for unproductive care.  For example, when researchers found that mammograms were overused on younger women, many interest groups immediately opposed the findings. How much of the opposition was due to self-interest?  Doing more mammograms is more profitable than less.  Many opponents of comparative effectiveness research use the word ‘rationing’ to object to any kind of research that suggests that some kinds of care are inefficient.  As Leonhardt says,

…The comparative-effectiveness research favored by the [bipartisan panel led by Howard Baker, Tom Daschle, Bob Dole and George Mitchell] and the White House has inspired opposition from some doctors, members of Congress and patient groups. Certainly, the critics are right to demand that the research be done carefully. It should examine different forms of a disease and, ideally, various subpopulations who have the disease. Just as important, scientists — not political appointees or Congress — should be in charge of the research.

But flat-out opposition to comparative effectiveness is, in the end, opposition to making good choices. And all the noise about rationing is not really a courageous stand against less medical care. It’s a utopian stand against better medical care.