Jonathan Cohn

Yes, Let's Talk About Rationing

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I can't stop stewing over that David Brooks column about the future of Medicare. It's not because the article itself was so awful. Like I said a few days ago, the column was (typical for Brooks) more nuanced and open-minded than most conservative articles about health care. But it also reinforced some misleading impressions about the health care debate that demand correction.

One is the right's conception of "rationing." Conservatives would have you believe that we live in a world where you get whatever health care you want, whenever you want, wherever you want -- and that the Affordable Care Act will change that, by empowering Medicare to make decisions about what to cover and what not to cover. But nothing could be farther from the truth.

Rationing is already a fixture of our health care system. It happens every time an insurer says no to a treatment. It happens every time a doctor or hospital recommends against a procedure because it doesn't seem worth the cost. And it happens every time somebody forgoes care because it's too expensive. 

The latter, of course, is most severe in the U.S., as surveys from the Commonwealth Fund have demonstrated repeatedly. (See chart above.) The other forms take place all over the world, to varying extents.

At the moment, Medicare does its rationing primarily (not exclusively) by limiting what it pays hospitals and doctors. Under the Affordable Care Act, Medicare would limit payments even more aggressively. Republicans and fellow conservative travelers regularly excoriate these efforts as "price controls" or "socialism." This might come as a surprise to George H.W. Bush, who first applied these changes to physician reimbursement, or to the late Ronald Reagan, who first imposed them on hospitals. 

Of course, the Affordable Care Act doesn't merely direct Medicare to cut payments more aggressively. It also directs Medicare to cut payments more judiciously, by offering financial incentives to push doctors, hospitals, and other providers or producers of care to be more efficient. As I've written before, optimists like myself think that this mix of "payment reforms" will allow Medicare to provide medical care of the same or better quality while spending fewer taxpayer dollars.

There's room for honest debate over whether it will work out that way. Although past payment reductions don't seem to have harmed beneficiaries, future ones could, at least in theory. But even if those critics are right, I think that sort of rationing would still be far, far preferable to the kind conservatives would impose under the Republican budget.

Uwe Reinhardt, the Princeton economist and health care expert, made this point in an e-mail after Brooks' column appeared:

David Brooks ... believes the difference between Democrats and Republicans is merely the direction of control: centralized top down control favored by the Democrats versus decentralized bottom up control by consumers. In fact, it is about different styles of rationing. Democrats countenance rationing for all through some collective mechanism. Republicans favor rationing by price and ability to pay, that is, by income class, through the market place. In other words, the fight is over the distributive ethic that should govern health care. 

I'd just add, one more time, that the debate is over more than the style of rationing. It's also over the extent of rationing. The Republicans want to reduce Medicare spending by a lot more than Democrats do. Given the magnitude of the difference, it's virtually certain seniors would have far worse access to care under the Republican plan than they would under the Democrat.

For more thoughts on rationing and its real meaning, read Suzy Khimm's item on this from the Washington Post last week.

Updated: I added material in order to make clear that past efforts at reducing Medicare payments don't seem to have harmed beneficiaries.

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