At The Economist, rationing is in demand

A recent editorial in The Economist addresses whether Dr. Donald Berwick (new head of the Centers for Medicare & Medicaid Services) really intends to ration health care as many conservatives suspect. The editorial calls this claim "politically explosive" but then goes on to defend and rationalize health care rationing:

That leaves the third charge levied against Dr Berwick--that he will become America's "rationer-in-chief" of medical care. This is a politically explosive claim: Americans do not like the sound of rationing. Indeed, the noisiest protests against Mr Obama's reform efforts broke out last August when some Republicans, including Sarah Palin, claimed that "death panels" would eventually decide which sick people to kill off first to save money.

Conservatives point to the doctor's endorsements of Britain's National Health Service, a government-run system that is called "socialism" in right-wing America. What this means, says Dr Barrasso, is that "Dr Berwick is a self-professed supporter of rationing health care."

That is true, but it obscures the larger point. Every health system rations in some way or other; the demand for health care is always greater than the resources available. The question is whether rationing is done openly and as sensibly as possible--or done implicitly, through murky pricing, bureaucratic fiat or denial of care.

Even Paul Ryan, a leading Republican congressman, has acknowledged this. "Rationing happens today! The question is who will do it? The government? Or you, your doctor and your family?" he asks. The most objectionable aspect of Dr Berwick's recess appointment is that Americans deserve a grown-up debate about this subject. It appears they will have to wait a bit longer for it.

I'm all for having a grown-up debate, but I think that if we're going to use grown-up terms like "rationing" and "demand," maybe we ought to be clear about what those terms mean.

"Rationing" means allocating rations, usually because they are in short supply:

1. A fixed portion, especially an amount of food allotted to persons in military service or to civilians in times of scarcity.
Are we living in times of scarce health care supply?

The Economist seems to think so, for they say that "demand" exceeds supply:

Every health system rations in some way or other; the demand for health care is always greater than the resources available.
Is that necessarily true?

How is The Economist defining "demand"? Presumably, the writers who think that we Americans "deserve a grown-up debate" are either economists or at least conversant in economics. Now, I am not an economist, but I am somewhat familiar with the word "demand" in the economic sense:

a. The desire to possess a commodity or make use of a service, combined with the ability to purchase it.
Which means that in health care terms, demand would be defined either as:
  • a. how many people want general health care (such as health insurance) and are able to pay for it;
  • b. How many people want a particular treatment for a particular illness, and are able to pay for it.
  • Let's take an unpleasant procedure I touched on in a previous post; colonoscopy. It's not cheap, but it's a good idea for men my age to have it done. The last time I looked, there was no shortage of gastroenterologists and gastroenterology clinics available to perform that procedure on anyone willing to pay for it. So there is adequate supply to meet the demand. As to those who do not want to undergo the procedure or who cannot afford it, there is little demand.

    So what's to ration? Rationing implies a shortage. Not enough to go around. If anyone who wants a given thing who is able to pay for it can get the thing, then by definition the demand is not "greater than the resources available."

    So, even though I am no economist, I think The Economist may be misusing the word "demand."

    Is rationing even the right word?

    I think it's fair to point out that in countries with government health care, there are two year long waiting lists for colonoscopies. And for procedures like heart surgery, forget it. There are not only long waiting lists, but the NHS resorts to punitive denial of treatment for patients who try to buy medical services privately.

    So maybe government health care leads to shortages which would make rationing an inevitable part of government health care. If that's what The Economist wants to say, they should say so.

    posted by Eric on 07.19.10 at 01:45 PM


    The two greatest mistakes made by the Left is that market distortions that result from increased regulation won't drive the prices of goods up, and; that markets are static.

    You can mandate cheap, affordable housing, but if the return on investment in housing is lower than the return on investment in some other good or commodity, what is the incentive to invest in the lower rate of return? Simply mandating cheap, affordable housing is probably the simplest way to assure that a shortage in cheap, affordable housing will occur. Same thing is true with any good or commodity; mandate low price and shortages result. Static analysis would tend to allow the policy-maker to suggest that more would be consumed since the consumer is being protected from high prices. Like, more health care because costs have been contained.

    The next step is to follow the model of our favourite Venezuelan, Senor Chavez. When industries fail to produce goods under price mandates, the industries are simply nationalized. Then, when markets fail, we blame the global corporate hegemonists.

    Simple world view, really.

    OregonGuy   ·  July 19, 2010 2:05 PM

    Old and busted: "Those crazy right-wingers and their lies about death panels!"

    The new hawtness: "Hooray for death panels!"

    TallDave   ·  July 20, 2010 10:40 AM

    The "scarcity" is that rich people can afford better treatment than poor people.
    So they want the rich people to get the same treatment as poor people, therefore, since everybody can't get get the same above average care, it's good "scarcity".

    The left wants equality of outcome, not equality of opportunity.
    At least, for everybody else. They, being smarter and better, are the elite who must tell the rest of us how to live.
    Wait until your average lefty finds out they're not the elite and that our political betters have as much contempt for them as I do.

    Our media betters are finding that out right now and it's starting to tick them off.

    Veeshir   ·  July 20, 2010 12:48 PM

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