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Health Care Is Already Rationed But Not Rationally June 29, 2009

Posted by Dwight Furrow in Dwight Furrow's Posts, ethics of care, politics.
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In the Senate’s health care debate, Republicans are stonewalling progress by complaining about the health care rationing that is part of Obama’s plan to reduce medical costs. Obama wants to use Comparative Effectiveness Research to determine which procedures and medications are most effective and direct publicly administered insurance plans to pay for only those procedures that pass this test.

A group of Republican lawmakers led by Sen. Jon Kyl (Ariz.) are introducing a bill that would prohibit any move by the federal government to ration health care based on results derived from federally funded comparative effectiveness research.

But this is silly. We already ration health care

In our present system, medical decisions are guided not by evidence of results, but by what will produce profits for the medical community. Prevention, inexpensive generic drugs, and the avoidance of mistakes are deemphasized because there is little money to made on them. And people who lack insurance get very little care because there is no money to made treating them.

By contrast, people with expensive health plans are over-treated and undergo unnecessary procedures because someone does make a profit on these. This is because all the incentives in our health delivery system are centered around profit rather than what will produce better health.

This is rationing.

To make matters worse, insurance companies make their money by refusing much needed care.

Here is a summary of testimony before the Commerce Committee by Wendell Potter, a former head of corporate communications for CIGNA, the country’s fourth-largest insurer. Via Ezra Klein:

What drove Potter from the health insurance business was, well, the health insurance business. The industry, Potter says, is driven by “two key figures: earnings per share and the medical-loss ratio, or medical-benefit ratio, as the industry now terms it. That is the ratio between what the company actually pays out in claims and what it has left over to cover sales, marketing, underwriting and other administrative expenses and, of course, profits.”

Think about that term for a moment: The industry literally has a term for how much money it “loses” paying for health care.

The best way to drive down “medical-loss,” explains Potter, is to stop insuring unhealthy people. You won’t, after all, have to spend very much of a healthy person’s dollar on medical care because he or she won’t need much medical care. And the insurance industry accomplishes this through two main policies. “One is policy rescission,” says Potter. “They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment.”

And don’t be fooled: rescission is important to the business model. Last week, at a hearing before the House Subcommittee on Oversight and Investigation, Rep. Bart Stupak, the committee chairman, asked three insurance industry executives if they would commit to ending rescission except in cases of intentional fraud. “No,” they each said.

Potter also emphasized the practice known as “purging.” This is where insurers rid themselves of unprofitable accounts by slapping them with “intentionally unrealistic rate increases.” One famous example came when Cigna decided to drive the Entertainment Industry Group Insurance Trust in California and New Jersey off of its books. It hit them with a rate increase that would have left some family plans costing more than $44,000 a year, and it gave them three months to come up with the cash.

This is rationing too.

The problem is that this rationing is based on arbitrary criteria that have nothing to do with producing good health.

As David Leonhardt wrote recently:

…There is no such thing as a free lunch. The choice isn’t between rationing and not rationing. It’s between rationing well and rationing badly. Given that the United States devotes far more of its economy to health care than other rich countries, and gets worse results by many measures, it’s hard to argue that we are now rationing very rationally.

[…]But flat-out opposition to comparative effectiveness is, in the end, opposition to making good choices. And all the noise about rationing is not really a courageous stand against less medical care. It’s a utopian stand against better medical care.

We have finite resources to spend on health care. We can never provide as much care as people want or need. So rationing is inevitable. The question is whether there is an ethical basis for the way we ration.

If you think wealthy people deserve more costly (though often ineffective) care than they need, and middle class and poor people deserve far less than they need, then I suppose you think the status quo is just fine.

Apparently, that is what Republicans think.


book-section-book-cover2 Dwight Furrow is author of

Reviving the Left: The Need to Restore Liberal Values in America

or Visit the Website: www.revivingliberalism.com




1. Federal Farmer - October 13, 2009

Now the insurance industry is dupping the WH. This says something about the limits of business ethics generally. I’ve just posted on it at http://soozah.wordpress.com/2009/10/13/health-care-insurance-industry-promises-in-corporate-public-affairs/

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