Health Care Rationing Rhetoric Overlooks Reality By DAVID LEONHARDT

June 17, 2009
Economic Scene
Health Care Rationing Rhetoric Overlooks Reality By DAVID LEONHARDT
Rationing.

More to the point: Rationing!

As in: Wait, are you talking about rationing medical care? Access to medical care is a fundamental right. And rationing sounds like something out of the Soviet Union. Or at least Canada.

The r-word has become a rejoinder to anyone who says that this country must reduce its runaway health spending, especially anyone who favors cutting back on treatments that don’t have scientific evidence behind them. You can expect to hear a lot more about rationing as health care becomes the dominant issue in Washington this summer.

Today, I want to try to explain why 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. Even in the United States, the richest society in human history, we are constantly rationing. We ration spots in good public high schools. We ration lakefront homes. We ration the best cuts of steak and wild-caught salmon.

Health care, I realize, seems as if it should be different. But it isn’t. Already, we cannot afford every form of medical care that we might like. So we ration.

We spend billions of dollars on operations, tests and drugs that haven’t been proved to make people healthier. Yet we have not spent the money to install computerized medical records — and we suffer more medical errors than many other countries.

We underpay primary care doctors, relative to specialists, and they keep us stewing in waiting rooms while they try to see as many patients as possible. We don’t reimburse different specialists for time spent collaborating with one another, and many hard-to-diagnose conditions go untreated. We don’t pay nurses to counsel people on how to improve their diets or remember to take their pills, and manageable cases of diabetes and heart disease become fatal.

“Just because there isn’t some government agency specifically telling you which treatments you can have based on cost-effectiveness,” as Dr. Mark McClellan, head of Medicare in the Bush administration, says, “that doesn’t mean you aren’t getting some treatments.”

Milton Friedman’s beloved line is a good way to frame the issue: There is no such thing as a free lunch. The choice isn’t between rationing and not rationing. It’s between rationing well and rationing badly. Given that the United States devotes far more of its economy to health care than other rich countries, and gets worse results by many measures, it’s hard to argue that we are now rationing very rationally.

On Wednesday, a bipartisan panel led by four former Senate majority leaders — Howard Baker, Tom Daschle, Bob Dole and George Mitchell — will release a solid proposal for health care reform. Among other things, it would call on the federal government to do more research on which treatments actually work. An “independent health care council” would also be established, charged with helping the government avoid unnecessary health costs. The Obama administration supports a similar approach.

And connecting the dots is easy enough. Armed with better information, Medicare could pay more for effective treatments — and no longer pay quite so much for health care that doesn’t make people healthier.

Mr. Baker, Mr. Daschle, Mr. Dole and Mr. Mitchell: I accuse you of rationing.

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There are three main ways that the health care system already imposes rationing on 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 put many employers in a tough spot. They have had to pay much higher insurance premiums, which have increased their labor costs. To make up for these increases, many have given meager pay raises.

This tradeoff is often explicit during contract negotiations between a company and a labor union. For nonunionized workers, the tradeoff tends to be invisible. It happens behind closed doors in the human resources department. But it still happens.

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 inflation-adjusted pay. Victor Fuchs, a Stanford economist, and Ezekiel Emanuel, an oncologist now in the Obama administration, 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, they wrote, 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 insurance and 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 one I described near the beginning of this column: the failure to provide certain types of 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.

In Australia, 81 percent of primary care doctors have set up a way for their patients to get after-hours care, according to the Commonwealth Fund. In the United States, only 40 percent have. Over all, the survival rates for many diseases in this country are no better than they are in countries that spend far less on health care. People here are less likely to have long-term survival after colorectal cancer, childhood leukemia or a kidney transplant than they are in Canada — that bastion of rationing.

None of this means that reducing health costs will be easy. The comparative-effectiveness research favored by the former Senate majority leaders 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.