GOPideas... ideas done right

A previous post discussed the inconvenient truths of health care and the most inconvenient of them all is that health care, much like any good or service in a market economy, is rationed. Have you or anyone you knew attempted to see a doctor, only to be told that the doctor was not taking new patients (or new Medicare/Medicaid patients)? The doctor is rationing based on patient relationship: a patient who does not have a current relationship with the doctor is denied treatment in favor of someone who does. Have you ever chosen not to fill a prescription? You have just exercised self-rationing --- a behavior that is often overlooked --- for reasons of cost or unwillingness, people forego treatment. Have you ever chosen a cheaper alternative (insurance package, medication, procedure)? Rationing based on cost ensures that people who can afford premium treatment pay top dollar, which optimizes economic return for the provider --- but prices other, potentially more needy, patients out of the market. Have you ever hear the term "in-network" --- that means that your option to go "out-of-network" is being rationed. To put this in terms that Republicans can understand: rationing is the necessary outcome of a free market

Deconstructing the economic forces at work within the U.S. health care system is far beyond the scope of a single post (the fundamental issue is discussed here), but rationing is already widespread. Insurance companies decide which treatments are covered, drugs are subsidized and which benefits are packaged together. Through reimbursement rates, the federal government decides how much certain services are worth --- which, in turn, drives providers from the marketplace, effectively rationing the number of providers available to those seeking care. The most prevalent rationing is self-rationing: not going to the doctor until something is drastically wrong, not filling prescriptions, not completing treatment schedules or ignoring diagnostic procedures are all forms of rationing.

Thus, the issue is not whether rationing occurs, because it already occurs on many levels, by many actors. The issues are: who gets to do the rationing, what gets rationed and, more importantly, how rationing decisions are made. Republicans are focused on the first two: that "government bureaucrats" are making rationing decisions and that certain treatments are rationed in countries with socialized medicine.

To be truly intellectually honest, Republicans should focus on the third: how rationing decision will be made. Are decisions made based on a return on investment calculation? Doing so would almost certainly cut Medicare spending and enhance spending on children and young adults. For example, if two patients needed dialysis, the younger patient would receive preference because of a longer anticipated lifespan in which contributions to society would be made. Would a partial co-payment system be implemented in which everyone could get treatment, but those willing to pay additional fees out of pocket would move to the front of the line? Would lifestyle factors (obesity, alcoholism, smoking) push certain people to the back of the line?

Rationing will need to occur because health care is both price and income inelastic --- and if more people receive health care (increase in demand) and are willing to pay (because they are on the government plan and government is paying) the currently unsustainable cost curve will only increase in speed and slope. How rationing will be done is the most important question because it will determine a.) whether costs are controlled and b.) which stakeholder groups receive preferential care.