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Health Care Rationing: The Basics

14 Aug

Another one of the political hot potatoes is “rationing.” Put simply, rationing is the distribution of resources. More specifically, rationing is the distribution of limited or scarce resources. Most goods and services are inherently limited. That is to say that there is not an unlimited supply of much of anything in the world. For example, there is not an endless supply of cheeseburgers. If there were, then everyone would be able to have as many cheeseburgers as they wished. Obviously, given a sufficient demand for cheeseburgers, we would run out of cattle at some point. Cheeseburgers are, therefore, a limited resource.

Health care is no different. It is not possible for everyone to get all of the health care they might desire whenever they happen to want it. So, we must — and, indeed, already do — ration health care. Consequently, when I hear someone say that the government wants to ration health care, I have no choice but to laugh. Rationing is a current reality.

What is really being confronted is not whether or not we will ration health care (since we already do), but more precisely how we intend to ration health care in this country. Generally, opponents of government involvement in health care believe that we should continue to ration on the basis of free market principles (i.e., ability to pay).

Now, I certainly believe that those who have managed to become financially successful should retain their freedom to choose more expensive health care services as they see fit. What I am uncomfortable with is our all-or-nothing system of market rationing. We have a very inequitable system wherein many individuals are effectively excluded from the system. Sure, they can and do get some care occasionally, but nowhere near what those of us with insurance experience.

Somehow, people have gotten the notion that government is going to put a cap on what type of health care benefits people will have access to in this country. There appears to be an overwhelming sense that limits will be put in place that limit choice. As Ezra Klein points out, however, we are talking about a floor and not a ceiling.

What this means is that government wants to set a guaranteed minimum standard that ensures that all Americans have access to certain essential health care services. In no way is the plan going to restrict how much care you can receive. Just as in other countries the world over, there will always be an option to “top up” — to purchase supplemental coverage. The well off will continue to have access to the best health care.

We already have a “safety net” system that helps provide coverage to those in need, but nets have holes. What we need is a safety blanket — an absolute guarantee of basic coverage for everyone. The market doesn’t have any interest in operating at this margin, because it doesn’t represent a profitable opportunity for insurers. It is all a matter of how well we intend to treat the least well-off in our society.

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Posted by on August 14, 2009 in "Rationing"

 

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