Thursday, June 25, 2009

Health care rationing

The other day I made the point that health care is rationed in every existing system. In an insurance model or out of pocket model, your ability to attain care depends on your access to insurance or how much money you have. In a single payer (government-run) system care is rationed by the use of waiting lists or outright denial of service.

With limited resources not everyone can get all the care they want exactly when they want it. We find this in food too -- most people can't get filet mignon every night. Some have to settle for mac and cheese. This is simple logic.

This isn't just theoretical, as a column in today's Wall Street Journal details how health care rationing occurs in other countries:
In France, assessment of medical products is done by the Committee for the Evaluation of Medicines. Reimbursement rates are set by the National Union of Sickness Insurance Funds, a group that also negotiates pay to doctors.

In Germany, the Federal Joint Committee regulates reimbursement and restrictions on prescribing, while the Institute for Quality and Efficiency in Healthcare does formal cost-effectiveness analysis. The Social Insurance Organization, technically a part of the Federal Joint Committee, is in charge of setting prices through a defined formula that monitors doctors' prescribing behavior and sets their practice budgets. In the past 12 months, the 15 medical products and services that cleared this process spent an average 35 months under review. (The shortest review was 19 months, the longest 51.)
Setting prices, of course, is the same as rationing as it eliminates the connection between supply and demand. If you limit gas to $1 per gallon it's a great deal if you are the first to the pump, but those arriving later are likely to be left high and dry.

The point to this is that rationing will take place regardless, either you do your own rationing or the insurance companies and government will do it for you. Given that reality, the best approach is to focus on methods of reducing costs in order to extend care to as many people as possible. Traditionally the best way to achieve this is through competition and direct interactions between consumers and providers (as opposed to third parties such as insurance companies).

No comments: