Politicians say it is time for an “adult conversation” about health care and the budget. I still wait. We cannot afford unlimited care for everyone, certainly not without regard to long-term prognosis and quality of life. Conversely, gross disparities in access to health care carry their own societal costs.
Therefore, we face two economic and moral choices: the extent to which residents should subsidize the health care of fellow residents and the extent to which our generation should burden future generations with the cost of care.
Politicians decry the rationing of care, but we already ration care. The wealthy can afford more and better care. This is nothing new. Before low-deductible, employer-sponsored plans became prevalent, families weighed the cost of treatment against the expected benefits. Because insureds now feel little direct financial impact from treatment decisions, someone else must weigh these factors. Under Medicare, the government sets treatment and cost parameters as a proxy for rationing. Managed care plans do it through coverages, limits and co-pays.
Life and death decisions have been made for years by transplant committees. Because, unlike money, organs cannot be printed or borrowed, our society understands that giving a liver to an otherwise healthy 30-year-old makes more sense than donating it to a 60-year-old recidivist alcoholic.
Any “adult” implementation of a sound policy necessarily will require rationing through limitations on services, broader exclusions, higher deductibles, lower caps and/or a qualitative weighing of cost and prognosis. If the government is funding care, then it must implement the rationing through bureaucratic regulation. Nongovernmental plans require similar mechanisms. So long as fees are based on services and consumers are insulated from a direct economic calculus, the payor is the only party with the incentive to limit cost.
In other countries, care is rationed by committees reviewing quality-of-life benefits vs. costs. The Netherlands even allows active euthanasia. Our society is not ready for this. We envision the young saying, “Grandma, I love you so much that it hurts me so much to see you in pain ... and, by the way, where do you bank?” End-of-life counseling proposals were decried as “killing granny.”
The recent court decision striking the individual mandate but upholding the remainder of the act is difficult to justify economically. Requiring insurers to cover pre-existing conditions without a corresponding duty on residents to obtain insurance necessarily would trigger substantial premium increases and higher government subsidies.
Any reform must address what we can afford now and how we allocate care. Historically, with the exception of Medicare and Medicaid, we have allocated that care based upon market forces. Not surprisingly, as the gap between rich and poor grows and the purchasing power of the middle class decreases, those disfavoring a market allocation of health care naturally increase. If some level of health care is to be guaranteed to all residents without exploding the national debt, it must be heavily rationed. Ultimate authority for treatment, and the criteria for treatment, necessarily would be made by the payor (perhaps with independent review).
For a government program, the payor by definition is the government. For nongovernmental programs, the payor is the insurer or plan administrator. Either way, rationing is here to stay, whether through coverage limits, deductibles, caps or panels. Let’s begin the “adult conversation” by expressing this reality.
Lewis E. Hassett is co-chairman of the insurance and reinsurance practice at the Atlanta-based law firm Morris, Manning & Martin, LLP.
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