Economics - General

Rationing Health Care

The N.Y. Times Magazine has a nice piece on rationing health care, but nothing too new if you’ve been a loyal reader of the Healthcare Economist. Below is an excerpt.

Health care is a scarce resource, and all scarce resources are rationed in one way or another. In the United States, most health care is privately financed, and so most rationing is by price: you get what you, or your employer, can afford to insure you for. But our current system of employer-financed health insurance exists only because the federal government encouraged it by making the premiums tax deductible. That is, in effect, a more than $200 billion government subsidy for health care. In the public sector, primarily Medicare, Medicaid and hospital emergency rooms, health care is rationed by long waits, high patient copayment requirements, low payments to doctors that discourage some from serving public patients and limits on payments to hospitals.

As I’ve said many times before, health care is a scarce good an must be rationed.  Unlike most goods, healthy people generally do not demand zero medical care, so some people are under the assumption that medical care is only for the sick and thus should not be rationed.  However, since medical care is costly, it must be rationed, either by price, by wait lists, or by other means.

The article also mentions Richard Kronick, a UCSD professor and member of my dissertation committee, and his research suggests that “there is little evidence to suggest that extending health insurance to all Americans would have a large effect on the number of deaths in the United States.”

The authors advocates using a QALYs to evaluate the cost effectiveness of treatments, just as the UK’s NICE does now.


  1. Yep, I just wrote and editorial on this myself for one of our PA journals. Rationing is inevitable. In fact, we already ration now, however, now we ration financially, IE; if you have good insurance and/or personal assets, you get good care. Yet, we spend 27% of our medicare budget on a patients LAST year of life.

    There are 2 absolutes on healthcare.

    1. There is a finite amount of money, doesn’t matter if you pay premiums, or taxes, etc. There is still only so much money.

    2. There is limited number of resources. AAMC predicts a shortage of 124,000 physicians by 2025, now PA’s and NP’s can temper this, but we are NOT physicians.

    Once you accept those 2 absolutes, then rationing is inevitable.

  2. Our goal should be to cover all individuals through private health insurance. We are not prepared to turn our health system over to the government. Advocate for greater transparency in both quality and price information. Place both the decision making ability and healthcare dollars in the hands of the consumer. Support the Friends of the U.S. Chamber and sign the Health Care petition at .

  3. What kind of idiots write this crap? Don’t take over healthcare in the first place. In England and Canada, people die from rationing.

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