Rationing Healthcare? We're Already Doing It

Eighty-two-year-old Helen's breast cancer treatment is very expensive. The $75,000 bill is covered by Medicare and her retiree insurance policy, a benefit of the good job she held for 30 years. She is otherwise in excellent health, and the post-treatment prognosis is good. Thirty-eight year-old Angelica, a mother of young twins, has been diagnosed with advanced-stage breast cancer. Angelica lost her insurance when she quit her job to start a family, and her husband's company stopped extending benefits to spouses as an alternative to downsizing. Now the doctors say that the treatment Angelica needs to survive will cost $80,000. She and her husband are hopeful they can raise the money from family members and loans.

Though the United States spends about $250 million every hour on healthcare, resources available both publicly and privately for this care in the United States, as in every country, are nonetheless finite. Hospital beds and budgets, numbers of MRI machines and other diagnostic tools, and family budgets, too, have limits. As with any finite commodity, more for some can mean less, or none, for others. And as our population ages and medical technology and medications become more sophisticated and costly, the pressure on available resources is mounting.

During a meeting this summer between President Obama and governors sympathetic to his healthcare agenda, the President urged them to avoid using the word "rationing." For many, the word conjures up specters of long waits or limits on individual choice. Others worry it could move medical or life-and-death decisions away from the family. But what is lost in this fear of rationing, and attempts to mute the word, is the fact that we are already rationing.

Rationing happens every day at every level of our healthcare system. Medicare policymakers pick which procedures they will reimburse, and health insurance companies select which medications they will cover. Americans age 65 and older have a universal entitlement to healthcare; other groups do not. People without insurance or money for out-of-pocket costs "self-ration" by going without screening, care, or medicines. These are all forms of allocating finite resources.

The U.S. spends more money on healthcare than any other industrialized nation. Yet we rank 29th in life expectancy. Japanese citizens can expect to outlive Americans, on average, by half a decade at a third of the price tag. Indeed, Americans live fewer years than citizens of Israel, Greece, Singapore, Costa Rica, Korea, and every Western European and Nordic country. On children's survival, the record is shocking. Our research shows that if we were on par with first-ranked Sweden in infant mortality, over 20,000 American babies would have lived to celebrate their first birthday in 2005 instead of dying prematurely, often of preventable causes.

In America, we ration healthcare based in large part on ability to pay. Who gets treated? Those with employment-based health insurance and those who can afford high out-of-pocket costs get treated. As a result, they are more likely to live long and healthy lives. In addition, as a society, we have identified several groups, among them the elderly, the disabled, and children in low-income families, who receive priority healthcare coverage through Medicaid, Medicare, and SCHIP. Who doesn't get treated? People without health insurance—among them low-wage workers, young adults, and self-employed middle-class workers—are more likely to go without needed care. More than four-fifths of the uninsured are full- or part-time workers. Who decides? The market determines who gets care, with some adjustments for those groups we have decided must be allocated some of the finite resources available.

In every one of our peer countries, healthcare is rationed largely based on medical need. Who gets treated? All our Western European, Nordic, Japanese, Canadian, and Australian peers have universal coverage for healthcare costs for a core set of services. On the basis of medical and cost-effectiveness research, and with strong emphasis on preventive care, treatment is prioritized for those who need it most. While none of these systems is perfect, nobody is left out due to inability to pay or prior medical conditions. Who doesn't get treated? There are undeniable, sometimes painful challenges to the system in every one of these countries, which can include long travel distance to specialists, excessive waiting times for non-life-threatening conditions, and even decisions not to treat patients when evidence suggests that they will gain no or only marginal benefits. Treatment decisions are generally made in favor of those interventions that provide the highest value for the price paid; priority goes to patients with the greatest prospects for recovery and resumption of a productive life. Who decides? Decisions are typically made based on transparent national criteria. In Norway, for instance, severity of illness and the range of benefits of treatment in relation to its costs and risks are considered; guidelines do not allow for consideration of social characteristics, whether the illness is self-inflicted, or age (except to the degree that age may be associated with higher risks and marginal benefits). In Norway, if Helen and Angelica each had a good prognosis for survival with treatment (measured by medically sound criteria like five-year survival rates), both would get it.

The question of how to triage medical care is deeply unsettling. Nobody wants to deny any person the best care possible, and everyone recognizes that another day, month, or year of life for a dear friend or relative can be precious to those who love them. Yet many would agree that spending tens of thousands of dollars on long-shot, end-of-life treatments for those almost certain to die very soon is unwise on many levels. This tension between fairness in decision-making on the one hand and the wish for the very best treatment for each individual on the other will always exist.

But what is clear is that we are falling woefully short in both ways. Every year, according to a recent Harvard Medical School study, over 44,000 adults deaths are linked to lack of health coverage, $130 billion is lost annually in workplace productivity due to uninsurance, and inability to afford early screening and detection leads to both more costly treatment and greater personal anguish. Additionally, over half of personal bankruptcies are related to inability to pay for illness or injury. Even if Angelica were able to scrounge up the money to afford the breast cancer treatment, it would likely send her family into paralyzing debt.

The question on the table today for policymakers and the people who elect them is not whether to start rationing healthcare. Rather, recognizing that we are already rationing, the question is how to alter the terms in a way that balances fairness and efficiency.

The authors are Co-Directors of the American Human Development Project. This is a a nonpartisan initiative of the NY-based Social Science Research Council with the mission to stimulate fact-based public debate about and political attention to human development issues in the U.S. and to empower people to hold elected officials accountable for progress on issues we all care about: health, education, and standard of living. For interactive maps with state data and other dynamic tools on the distribution of opportunity in America, go to: http://www.measureofamerica.org.