Rationing Healthcare

Within the last decade private insurance premiums have doubled, rising four times faster than wages. Insolvency of the current government assisted healthcare programs, Medicare and Medicaid, are on track to occur within the next eight years (Singer, 2009, para. 3).

Facts such as these lead most experts and scholars such as Peter Singer, bioethics professor at Princeton University, to believe rationing of healthcare is not only necessary but highly desired for all stakeholders involved. The fact of the matter is that healthcare is a scarce resource, and like all scarce resources, it requires close management and rationing to ensure its best use. At present, healthcare in a sense, is rationed through price. In the realm of public opinion however, rationing healthcare is often times connected to the highly politicized word, ‘socialism’ and is highly undesired.

In its truest form however, rationing simply put, is a way of distributing limited resources to garner the best overall “bang for the buck. ” In healthcare, rationing is a manner of which providing the best quality of care to the largest number of patients. Investopedia defines rationing as: The artificial restriction of raw materials, goods or services. Rationing commonly occurs when governments fear a shortage and want to make sure people have access to necessities, such as after a natural disaster or during a war.

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Governments can also impose rationing in the face of failed policies such as central planning, or may be forced to use rationing as a result of shortages ("Definition of ’Rationing’," 2013, p. 1). This paper’s purpose is to examine the rationale behind the rationing of healthcare. It will examine the affect it has on healthcare delivery, impact on healthcare providers and consumers, possible solutions, and the role healthcare administrators/managers play in the process.

The paper will reference institutions such as the National Institute for Health and Clinical Excellence (NICE) and other national healthcare systems like Great Britain, Australia, and Canada. In addition, a definition of quality-adjusted life-year will be presented and debated as a possible option to ration care fair and proportionately. Affect Rationing Has on Healthcare Delivery. Challenger’s arguement. Sally C. Pipes, Chief Executive officer of Pacific Research Institute and adversary to the rationing of healthcare, wrote an article titled “Obama Will Ration Your Healthcare. Within the article, many subjects are discussed, including the National Institute for Health and Clinical Excellence (NICE), a rationing system that controls government costs. It is Pipes’ belief that rationing healthcare will result in the elderly population being discriminated against due to cost benefit analysis. Her article goes on further to state, “the process of determining which drugs and which treatments would be approved for use would be quickly politicized” (Pipes, 2008, para. 9).

There is strong argument that rationing healthcare would ultimately fail in the hands of public opinion. To make this point, Pipes references lessons learned in managed care during the 1990’s. The goal of cost containment was successful however rejected by US citizens resulting in Congress passing a patient’s Bill of Rights (Pipes, 2008, para. 8). Other advocates against healthcare rationing state similar responses to Sally Pipes. Claire Andre and Manuel Velasquez, members of the Markkula Center for Applied Ethics, go as far as quoting Euripedes, 500 B. C. I hate the men who would prolong their lives by foods and drinks and charms of magic art perverting nature's course to keep off death. They ought, when they no longer serve the land to quit this life, and clear the way for youth. It is their firm belief that through rationing, healthcare would result in the elderly and disabled populations being limited in their care because of a measure called a quality-adjusted life-year (QALY). QALY is a unit designed to enable a comparison of the benefits achieved by different forms of health care (Singer, 2009, para. 22).

Andre and Velasquez state the morals of such rationing would be unjust and take away constitutional rights to receive equal care. Proponent’s arguement. Many proponents for rationing healthcare resources feel it is only a matter of time before it becomes necessary. Healthcare analysts and providers predict a health care crisis because of:

• Costs of Healthcare
• Increased number of uninsured individuals
• Unknown status of current healthcare system Factors that are affecting these conclusions consist of:
• Expenses are rising faster than the cost of living. Medicare and Medicaid spending (which comprises 26 percent of the federal budget) is expanding faster than the economic growth rate
• Individuals and their families continue to pay a significant amount out of pocket (Ukleja Center for Ethical Leadership, 2012, Slide 3)

While these factors are compelling, the numbers representing US spending costs ultimately lend credence to the argument for healthcare rationing. In June of 2011, the National Coalition on Health Care reported healthcare spending reached 18. 2% of US Gross Domestic Product (GDP), up by 5. % from the prior year (The National Coalition on Health Care, 2011, p. 1). With a continued climb in spending, insolvency of the current healthcare system could occur as early as eight years. President Obama has plainly stated “that America’s health care system is broken” (Singer, 2009, para. 5). Proponents for the rationing of healthcare are in agreement with the President and see little to no alternative. While some feel rationing is the way to avoid bankrupting the healthcare system others believe the wrong form of rationing is already occurring in the form of ability to pay.

Examples of such rationing comes in the form of pharmaceutical deductibles for life saving medication. If the individual is unable to afford the medication they go without. Professionals like Simon Rottenberg, Professor of Economics at the University of Massachusetts, and David J. Theroux, President and Chief Executive Officer of The Independent Institute and Publisher of The Independent Review, warn against this form of rationing and instead, believe it should be based on a measurement of life quality.

They state: There is a strong emotional attraction for price controls as a way for the government to “do something. ” However, well-intentioned motives are not enough—the results also count and whether the consequences from government action are beneficial to the public, especially the disadvantaged, or not (Rottenberg ; Theroux, 1994, p. 1). Examples of where well-intentioned government motives failed in their attempts to ration health care based on price can be found in Germany and Japan.

Due to the belt tightening based price rationing both countries experienced shortages of medications, reduced funding for research, and black market criminal activity, along with dissatisfied patients (Rottenberg ; Theroux, 1994, p. 2). Although there is a valid argument for rationed care, determination of what factor should be used to determine who gets what care is still up for debate. Under the solutions category of this paper quality-adjusted life-year (QALY) will be further defined and labeled as the best way to ration care. A method for calculating QALY will be explained and its validity defended.

Current Impact on Healthcare Consumers and Institutions. Health care organizations around the world all rely on some form of rationing of care due to limited resources. Ultimately rationing limits access to healthcare. In the case of the United States, this is done through health coverage both government and private. Creating a universal coverage system will require a rationing system that is both ethical and cost effective. Its impacts can only be examined in theory based on review and comparing of the US to that of other countries’ such as Canada and Great Britain.

Review of healthcare rationing in the United States. When comparing the United States’ current healthcare coverage system to those of other countries, the country does not measure up. Under the current system, health care costs in the US result in absorption of approximately one in six dollars of national spending (Singer, 2009). A poor economy along with increased healthcare costs have reduced the number of those with healthcare coverage. In 2012 the estimates indicate approximately 44. 6% of US citizens have health care coverage, a decline of 1. % from the prior year (Young, 2013). At present, the US spends 1. 5 times more than other countries around the world (Kane, 2012, para. 8) with 90% percent of Americans who believe the US healthcare system needs fundamental changes or a complete overhaul (Center for American Progress, 2007, p. 3). Great Britain. In Britain, all citizens have healthcare coverage, a sharp contrast to the United States. 76% of citizens in Great Britain approve of the current system (Singer, 2009) and 9. 6% of GDP is spent on their healthcare needs (Kane, 2012, table 2).

The country uses the National Institute for Health and Clinical Excellence (NICE) as a resource for determining the rationing of health care services. NICE is an independent organization that provides national guidance and standards on the promotion of good health and the prevention and treatment of ill health (NHS Choices, 2011, para. 3). The organization focuses on: * Public health * Health technologies * Clinical practice * Quality standards * Quality and outcomes framework Canada. Possible Solution.

QALY is an opportunity as a measurement for a unbiased approach to organizing healthcare under an umbrella of unified understanding. As a proponent to rationing of healthcare, QALY offers an approach that focuses on the best quality of life compared to that of life extensions. For example, an individual who is 3o years of age has a life expectancy of 70 years compared to that of someone who is 85 years of age who has exceeded their life expectancy. It is cost beneficial to provide life -saving medicine to the individual who is at 30 opposed to the one who are 85 because there is a greater bang for the buck.

In essence QALY is a measurement that can help determine the best way to use resources and allocate funds toward the best overall outcome. Unfortunately this decision can result in death for those of less dire circumstances or for those that are less likely to result in successful outcomes. Until American citizens decide on the emphasis of cost vs. life the matter will remain unresolved. Until then, healthcare remains in a grey area where they attempt to balance the value of life with the costs that are associate with maintaining life.

References

1. Andre, C. ; Velasquez, M. (2010). Aged-Based Health Care Rationing. Retrieved from http://www. scu. edu/ethics/publications/iie/v3n3/age. html
2. Center for American Progress. (2007). Health Care by the Numbers: Ensure Affordable Coverage for All. Retrieved from http://www. americanprogress. org/issues/healthcare/news/2007/05/03/2962/health-care-by-the-numbers/
3. Definition of ’Rationing’. (2013). Retrieved from http://www. investopedia. com/terms/r/rationing. asp#axzz2Lp5M2H7u
4. Kane, J. (2012). Health Costs: How the U. S. Compares With Other Countries. Retrieved from http://www. pbs. rg/newshour/rundown/2012/10/health-costs-how-the-us-compares-with-other-countries. html
5. NHS Choices. (2011). Health watchdogs and authorities. Retrieved from http://www. nhs. uk/NHSEngland/thenhs/healthregulators/Pages/nice. aspx
6. Pipes, S. C. (2008). Obama Will Ration Your Health Care. Retrieved from http://online. wsj. com/article/SB123060332638041525. html
7. Rottenberg, S.; Theroux, D. J. (1994). Rationing Health Care: Price Controls Are Hazardous to Our Health . Retrieved from http://www. independent. org/publications/article. asp? id=1201
8. Singer, P. (2009). Why We Must Ration Health Care. Retrieved from http://www. nytimes. com/2009/07/19/magazine/19healthcare-t. html? pagewanted=all;_r=0
9. The National Coalition on Health Care. (2011). Health Care Spending as Percentage of GDP Reaches All-Time High. Retrieved from http://nchc. org/node/1171
10. Ukleja Center for Ethical Leadership. (2012). Rationing Health Care. Retrieved from www. csulb. edu/colleges/cba/ucel/modules/documents/rationing-health
11. Young, J. (2013). Number of Uninsured in U. S. Rises as Workers Lose Jobs and Health Insurance. Retrieved from http://www. huffingtonpost. com/2012/02/14/number-of-uninsured-in-us_n_1276189. html

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