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March 5, 2009

Health Care Rationing Isn’t Fun, But It’s Unavoidable

by Brad Warbiany

Sad stories abound in the world of health care, because health care has a few peculiar features. First, when you get it wrong, people die. Heck, sometimes if you get it right, people die. Second, it’s terribly expensive. This is actually a good thing, in a way. The cost of advanced western health care is a function of its capability. Each level of “hard new problem” usually requires a lot of time, energy, and research to solve, and that cost must be recouped in some manner. But the expense is such that for difficult problems, it’s extremely unlikely that any normal person could afford his or her own care out of pocket.

When you take a highly emotionally charged issue, which happens to be so expensive that it is unaffordable on a self-financed basis, you’re going to get problems. When you can’t afford to pay for calamity, you try to find a way to risk-pool with others to distribute the cost. But when the calamity is too expensive even for the group you’re risk-pooling with, the sad answer is rationing. And when it’s your insurance company telling you that they’re not going to pay for your care — and you’re going to die — you feel betrayed.

That’s what people are faced with, relayed by Karen Tumulty for Time:

Every story is different, but the contours of the problem tend to be depressingly similar: the 10-year-old leukemia patient in Ohio who, after three rounds of chemotherapy and a bone-marrow transplant, had almost exhausted the maximum $1.5 million lifetime benefit allowed under her father’s employer-provided plan; the Connecticut grocery-store worker who put off the radiation treatments for her Stage 2 breast cancer because she had used up her company plan’s $20,000 annual maximum and was $18,000 in debt; the New Hampshire accountant who, unable to work during his treatment for Stage 3B stomach cancer, had to stop paying his mortgage to afford a $1,120 monthly premium for coverage with the state’s high-risk insurance pool.

What makes these cases terrifying, in addition to heartbreaking, is that they reveal the hard truth about this country’s health-care system: just about anyone could be one bad diagnosis away from financial ruin.

That’s a soft way to put it. In fact, you’re one bad diagnosis away from death. Of course, you’re one wrong step off a curb away from death, too, but I’m not here to trivialize this. These are life-or-death issues, and when your insurance company stops paying for something, it’s common to blame the insurance company for your death instead of the disease which is killing you.

Ezra Klein, writing in response to the same piece, talks about the fact that this is the emotional wedge that will push through the vaunted “health reform” he desires:

But the final outcome of health reform will be less about Beltway moments like today’s event and more about the pressure applied by stories like the one Karen Tumulty tells on this week’s cover of Time magazine.

Karen — a bone fide health care wonk — writes of the trouble she’s had navigating the insurance market with her brother, who was recently diagnosed with kidney failure. And the trouble is not because he didn’t have health coverage and it’s not because Karen doesn’t know how to speak to an insurance representative or read the policy details. The trouble, in other words, is not for the 15 percent of Americans who are uninsured. It’s for the 85 percent who have health care coverage.

The promise, of course, will be that you won’t have those cold-hearted insurance men with their uncaring actuarial tables and desire for profit making your rationing decisions. What is left unsaid is that the rationing decisions will still occur. (H/T QandO)

The Government’s rationing body said two drugs for advanced breast cancer and a rare form of stomach cancer were too expensive for the NHS.

The National Institute for Health and Clinical Excellence is expected to confirm guidance in the next few weeks that will effectively ban their use.

The move comes despite a pledge by Nice to be more flexible in giving life-extending drugs to terminally-ill cancer patients after a public outcry last year over ‘death sentence’ decisions. Leading campaigners last night said Nice had failed the ‘acid test’ of whether it really intended to give new priority to people with just a few months to live.

One drug, Lapatinib, can halve the speed of growth of breast cancer in one in five women with an aggressive form of the disease.

Dr Gillian Leng, Nice deputy chief executive, said ‘The committee concluded that Lapatinib is not a cost-effective use of NHS resources when compared with current treatment.’

Rationing is painful. Rationing sucks. When you buy insurance, or it’s given to everyone by the government, the assumption is that everything possible will be done to save your life — but it just isn’t true. You may believe that a few more months of your life is worth $100,000, or $500,000, or $500,000,000. But you’re not paying for it. The question isn’t “what is a few months of life worth?” The question is: “Who decides?”

I sincerely hope that nobody reading this is ever in the situation where a life-or-death medical decision is being made by someone thousands of miles away. But if it has to occur, do you really trust the government to make that decision? At least with private insurance, you have a choice between competing insurers based on who you think will make the decision in your best interest, and you can balance the cost of the insurance with the maximum payouts they’ll support. If we get single-payer, you get one-size-fits-all, even if it doesn’t fit you.

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6 Comments

  1. Health Care per se will not be rationed in fact our new government and president seems to believe that Health Care is the only economic sector where Supply Side Economics will work in fact they seem to feel their is an inexhaustable supply of competent trained professionals sitting around with noting to do when mainly they are often fatigued and overworked.

    What will be rationed – and is already in short supple is Quality Healthcare. Sorry but unless one opens the flood gates to trained immigrants from other countries (and there is almost always a severe language barrier)there are only so many truly excellent healthcare practitioners available and when their earning potential drops they will move to more lucrative fields of endeavor.

    Hence we have more people serviced by fewer good practitioners.

    Comment by PERSNICKETY CURMUDGEON — March 5, 2009 @ 3:29 pm
  2. It’s the elderly who will suffer the most from rationing.

    Comment by ArmedPorkypine — March 5, 2009 @ 7:57 pm
  3. Why does no one ever ask what kind of rationing sucks the least?

    There is one kind of rationing we all do every day, for food, clothing, gas, electronics, and a thousand other things. It’s called operating in a competitive free market. We’re generally OK with this kind of rationing because we are the ones deciding how much these items are worth to us.

    Yet we willingly hasten to let a complete stranger decide how much our life is worth to him. How much more is the insurance company willing to pay out? How much should the elderly be helped when the government could be helping productive younger citizens?

    Our preferences don’t enter into these decisions, so we are often unhappy with them. The insurance company sucks, we say. The government is screwing us because we’re too old, we say. Instead of doing something about it, we suck it up and say that’s just how the world works.

    The only moral rationing of health care is that done by an individual on his own behalf or by a third party of his choice. There is little to no moral rationing happening today because people have very little choice about who does the rationing for them. It’s either the government, whose authority is inescapable in this regard, or an insurer picked by an employer, where the law aligns it so that the cost of opting out makes the choice unrealistic.

    Our objective should be to get the rationing of health care back into the hands of the people, and supporting risk pooling mechanisms that align with that goal. Instead, we are barreling towards forcing people to allow the government to decide how much they’re worth. It’s sick.

    Comment by Quincy — March 6, 2009 @ 12:22 am
  4. Quincy:

    “Instead, we are barreling towards forcing people to allow the government to decide how much they’re worth. It’s sick.”

    You’re entirely right. The reason I wrote this post is that the people driving us towards this end are using the rationing of the private market as a reason to go with a government market. They’re conveniently avoiding the idea that government will ration (i.e. when right-wing folks talk about Canada’s wait times, they pooh-pooh it as if it’s not real data).

    I think you’re right that we need to have a serious discussion in this country that the choices aren’t between the bad system we have and the bad government proposals, but that we need to have a market system that is more transparent (and correspondingly less employer-based) that allows individuals to see the choices being made and have some say in those choices.

    We’ll never get that discussion, though, if we let the statists succeed in their suggestion that the choice is between a rationing private market and a non-rationing fairytale government system.

    Comment by Brad Warbiany — March 6, 2009 @ 8:19 am
  5. Brad –

    The reason I wrote this post is that the people driving us towards this end are using the rationing of the private market as a reason to go with a government market.

    That’s part of my problem though. They’re calling a highly-regulated market littered with perverse incentives inflicted by government a “free market” and then stating that the logical solution is government. The logic is mechanically correct, but the premise is completely false.

    Right now the incentive structure set up by government inflicts strong pressure on people to turn the decision of “how much is my life worth” to an insurance company of their employer’s choosing. The regulatory structure allowing only certain types of insurance means that once insurance is purchased, you are turning that over. Risk pooling doesn’t have to work that way.

    The market is in no way free, and I believe the way we need to frame this is that any nationalization plan is taking the worst aspects of what we currently have and inflicting them on everyone.

    Comment by Quincy — March 6, 2009 @ 11:18 am
  6. Quincy well put – the Health Care System is indeed perhaps the best example of the Left’s perverse Orwellian tactic of saying the highly, inefficiently, nonsensically regulated and subsidized Health Care System is failing because of deregualtion and free market competition.

    Comment by persnickety curmudegon — March 6, 2009 @ 4:00 pm

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