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Lecture Notes Rationing Healthcare
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Notes from all 10 lectures given in autumn 2020
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Rationing Health Care 2020Summary Lectures
1.1 Monday 9 Introduction to Rationing Health Care
November
1.2 Tuesday 10 Rationing: Principles and practices of rationing
November health care from an economic perspective
2.1 Monday 16 Supply side rationing: advantages and
November disadvantages
2.2 Tuesday 17 Demand side rationing: advantages and
November disadvantages
3.1 Monday 23 Rationing in the Netherlands
November
3.2 Tuesday 24 Equity weighting in economic evaluations
November
4.1 Monday 30 Rationing in the United Kingdom
November
4.2 Tuesday 1 Rationing in Germany
December
5.1 Monday 7 Rationing in Belgium
December
5.2 Monday 7 Rationing in times of the COVID-19 pandemic
December
Rationing
The definition of rationing during this course is ‘to limit the beneficial health care an individual
desires by any means – price or non-price, direct or indirect, explicit or implicit’.
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,Lecture 1 – Introduction Rationing
Healthcare
Learning goals Lecture 1
1. Understand what rationing health care is
2. Understand why rationing is needed and inevitable
3. Gain knowledge in possible ways of rationing
4. Get acquainted with political and societal sensitivity of rationing
Why is rationing health care relevant?
Perhaps the most difficult topic of them all. Saying no to people who need treatment or no
to particular treatments that would be of benefit to some people, is a very hard decision
Rationing is about somehow limiting the amount of care provided and consumed, often in
order to control / optimize healthcare expenditures.
“Rationing takes place when an individual is deprived of care which is of benefit (in terms of
improving health status, or the length and quality of life) and which is desired by the
patient.” (Maynard, 1999)
To limit the beneficial health care an individual desires by any means – price or non-price,
direct or indirect, explicit or implicit (Breyer, 2013)
Universal theme, relevant across the world
Level and intensity of rationing differs given levels of health care spending
Unfortunately: rationing also evokes images of war or crisis in which the limited supply of
essentials was distributed ... in relation to ownership of and willingness to trade a ‘coupon’
or certificate of ‘right’ to access the market.
Might we be exaggerating the problem of rationing in health care?
Although some might think that we exaggerate the problem, we cannot deny that health
care spending (%GDP) has grown the last decades in every OECD country. In the
Netherlands, we roughly spend 10% of our GDP on health. Are we actually rationing? Are
there limits in what we offer to people?
At the same time, life expectancy in -good health- increased (leads to more demands).
Those developments pressure health care budgets and led to World Wide Worries. In some
countries:
o Substantial copayments are charged to patients (leading to discussions of
accessibility). Asking extra money from patients to get care. For many people in low
income countries, essential medicines are unaffordable.
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, o Certain types of care are not covered under collectively financed insurance (financial
access limited). Example is the US. In the US millions of people are uninsured. In New
Zealand, for a while there was a guideline for dialysis, people over 75 were not
eligible for treatment.
o Or even worse, people die while waiting for appropriate care. In the UK waiting lists
are quite long.
Imagine
Imagine being in much pain, having difficulties walking and performing usual activities. After
waiting for a diagnosis (for 3 months) the operation you need is scheduled… for over 5
months…
Imagine you have a rare disease, causing your muscles to deteriorate. A new drug has come
on the market (costing $200,000 per patient per year). Your government decides not to
reimburse it…
Imagine living on a very tight budget. The washing machine just broke down. Your GP says
you should have an x-ray (for which you pay 385 euros out of pocket).
Different level
The level and intensity of rationing differs given levels of health care spending, which is partly caused
by cultural differences. Not only differences about the problem itself, but also about how it is
perceived and which treatments are accepted in a country. Also differences in talking openly about
rationing or keeping it to the government.
Resistance
People typically do not like rationing. Some think rationing can be avoided but economists
might say that there are always limits to what we can do.
Nevertheless, it can be very hard for an individual when you are the one whose treatment is
not covered. Such emotions make rationing a difficult discussion,
o especially because of the nature of good health (strong feelings of solidarity)
o and the way in which health care systems are financed.
The difficulty comes in deciding how to limit health care, on what basis, in general and in
individual cases, and how to make it work in practice.
Rationing from an economic perspective
Why are economists interested in rationing?
Many people think that economists are only interested in costs, and not in values. But that is not
true. Some say that the first lesson of economics is scarcity. Scarcity in health care is often denied.
The first lesson of politics is to disregard the first lesson of economics and therefore, some think
rationing can be avoided. However, economists would claim there are always limits to what we can
do.
Why are you here?
The economic answer is because there is nothing you would rather do than this right now. Choosing
to do this is in indication that you made a conscious choice to be here and to sacrifice all other things
you could be doing. Two important things:
Utility: people consciously work towards optimisation of something (happiness/welfare)
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, Nothing is costless. Time will never come back. You always have opportunity costs. You have
to choose in such a way that, given the scarcity of limited resources (time, money), the
outcomes will be optimal
Economics
Economics is concerned with the efficient allocation of scarce resources over alternative
uses and the equity implications. Trying to do as much good as possible (producing as much
happiness and welfare as possible), but also distributing that welfare and health in an
equitable way.
Efficiency relates to maximizing of welfare (happiness, utility)
Equity refers to notions of fair distributions (of welfare).
Equity and efficiency issues cannot be solved independently. Both are very important when
it comes to health and healthcare. But equity is more often the center of discussions.
The core assumption in economics is that desires/needs are infinite, yet resources are limited
Scarcity à never enough resources to satisfy all human wants and needs.
Thus, rationing is inevitable due to scarcity and we have to make choices about how we use the
available resources to maximize outcomes (e.g. welfare, health). We need to choose optimally.
Decisions
Normally, preferences (indifference curve), prices and budget restrictions (budget line)
determine the outcomes: people make own choices about their own consumption and take
income and price as given.
In decisions that affect more than one person (which is almost always the case in
healthcare), with effects across people, equity plays a role as well. It is inevitable that the
ideal level of equity can not be achieved. However, by making equity objectives as explicit as
can be, the trade-off between efficiency and equity can be measured.
So
For economists the fact that we need to ration is unsurprising
We always need to ration in all sectors of public and private life
There are never enough resources to fulfil all our wishes and needs
Utility is gained by buying and consuming goods at a price or below what they are willing
to pay, from profit-maximizing firms without market power selling at a prices they are
willing to accept (equal to marginal costs)
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