Healthcare has rationing in abundance

Late last month, as the Senate Finance Committee labored to produce its version of a healthcare bill, the Republican whip, Sen. Jon Kyl of Arizona, renewed an old warning. If the federal government intervenes to hold healthcare costs down, Kyl said, the result would be something nobody wants: rationing.

“The federal bureaucrats would, in effect, reduce the payment to providers, forcing them to reduce the care,” Kyl warned. “It’s not the government directly that is actually rationing care; now, we wouldn’t want to do that. We cut the providers to the point that they have to do it instead -- and that result is still rationing. As far as the patients are concerned, it’s still the same result.”

Kyl is mostly right. If government agencies (or insurance companies or individuals) limit the price they are willing to pay for a service, then providers are likely to provide less of it. To Kyl, that’s rationing. But it’s also sound economics.

Both Republicans and Democrats are in denial on this point. Republicans pretend that our current system doesn’t stop anyone from getting all the care they need. Democrats pretend that efforts to control costs won’t limit medical choices and treatment. But most real-world consumers know better: There is no free lunch. As medical technology improves, there’s no way all of us can have all the high-end care we want -- unless we are willing to pay for it.

At least one conservative Republican, Rep. Paul D. Ryan of Wisconsin, acknowledges what this debate is really about. “Rationing occurs now,” he said recently. “The question is: Who does it? Is it the government, or is it the patient [and] the doctor along with their insurance?”

As Ryan said, we already have rationing -- and we have for many years, even when Republicans controlled Congress.

It’s true that we don’t ration healthcare directly. If you’re willing to pay cash, you can buy all the healthcare you want -- at ruinous retail prices.

But we do ration healthcare indirectly, in two ways:

First, we ration health insurance. We make affordable insurance available to some people but not to others.

Second, our insurers -- insurance companies or the government, if you’re on Medicare or Medicaid -- ration what they’ll pay for. They’ll reimburse some costs but not others.

These things aren’t “rationing” in the old-fashioned sense, but as far as patients are concerned (to quote Kyl), “it’s the same result.”

The worst thing about our current “system” is that it’s irrational; decisions are often based on seemingly whimsical standards. Who gets affordable health insurance? Full-time employees of big companies -- but not many part-time workers, small-business employees or individual entrepreneurs (despite being heroes of the free market). Who decides what medical costs are paid? Not “the patient and the doctor”; that only happens in the utopia of Republican rhetoric. As every insured American knows, those decisions are actually made by a not-very-accountable hierarchy of insurance executives and Medicare bureaucrats. It’s not exactly rationing -- but as far as patients are concerned, “it’s the same result.”

The results look a lot like rationing too. In 2005, Joseph J. Doyle Jr., an economist at the Massachusetts Institute of Technology, studied the health outcomes of people who were seriously injured in automobile accidents -- a population he chose because they had little control, at that moment, over what insurance they had or what care they received.

He found that uninsured patients stayed in hospitals for less time, received 20% less care and died at a rate 37% higher than the insured. Their care wasn’t “rationed” in the classical sense, but as far as they were concerned, it was, again, the same result.

The Democrats’ proposals would make affordable insurance available to millions more people, if not to everyone. So one major form of rationing -- the rationing of health insurance -- would be relieved.

As for making decisions about what care is paid for, and at what price -- the indirect form of rationing Kyl warned about -- that’s a stickier point. The Democrats mostly kick the can down the road. Their bills set up a council on “comparative effectiveness research” to study which forms of care are cost-effective and which are wasteful, but they insist the board won’t have power to deny payment for inefficient practices -- at least, not now. Republicans are right to warn that the board might grow teeth: If it finds that a treatment produces negligible results at high cost, it will push to stop paying for it.

You’d think that’s a concept fiscal conservatives would applaud, but they’re more intent on blocking any expansion of the federal role in healthcare -- and on thwarting President Obama.

Under the Democrats’ bills, rationing reimbursements would still be indirect. The vast majority of people would keep the same insurance they have now, whether they like it or not. The main change, aside from making insurance almost universal, would be an incremental shift in decision-making power, taking a bit away from insurance companies and giving it to the federal government. With luck, that will mean more transparency when decisions are made, maybe even a little more accountability. Under “Obama-care,” if we don’t like the way our health insurance is run, we can vote the rascals out. We can’t do that to Blue Cross, Aetna or United Healthcare.

So the bad news is: Yes, there will be rationing. The good news: Whether we realize it or not, most of us are used to it already.