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Samenvatting colleges Rationing Healthcare (GW301)
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This document contains summaries of all lectures plus own notes from the Rationing Healthcare elective course.
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Abstract Lectures Rationing Health CareWeek 1
College 1.1A: Rationing health care: Economic insights
Rationing health care
- Perhaps the most difficult topic of them all
- Rationing - 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)
- You need a good explanation why you’re not giving the care
- Universal theme, relevant across the world
- Level and intensity of rationing differs given levels of health care spending
Rationing?
- As Alan Maynard (1999) noted: rationing 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?
o Because we still spend so much money on health care
o Are there really limits on what we can offer?
o There is also an increase in life expectancy
But still WWW: World Wide Worries
- In some countries, people die while waiting for appropriate care
o This isn’t only in third world countries, but also for example in the UK
- In some countries, substantial copayments are charged to patients, leading to discussions of
accessibility of care
o In Belgium this is the case
- In some countries, certain types of care are not covered under collectively financed health
insurance (basic benefits package) – financial access limited
o In the US
- In the US millions of people are uninsured
- In New Zealand, for a while, a guideline on end stage renal dialysis, indicated people over 75
were normally not eligible for treatment
o If you stopping treating people that need this, it is as close as a death treat
- For many people in low income countries, essential medicines are unaffordable
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).
- Is it okay to have these kind of decision being made by people themselves?
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,Resistance
- People typically do not like rationing: even the ‘R word’ is often avoided
- Any type of no to a treatment is normally met with a lot of resistance
- Some think rationing can be avoided but economists might say that there are always limits to
what we can do
- This is more difficult in the context of health care: because of nature of health and health
care and the way health care systems are financed
o If you say no to types of health care, which would improve your health, that becomes
public discussions
- 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
- People can be opposed to spending more money on health care, but are not opposed to
saying no to types of health care
College 1.1B: Rationing from an economic perspective
Economics?
Rationing from an economic perspective…
- John Kenneth Galbraith:
o Economics is extremely useful as a form of employment for economists.
- Oscar Wilde (cynic):
o An economist knows the price of everything but the value of nothing.
Economics
- Economics concerned with the efficient allocation of scarce resources over alternative uses
and the equity implications
- Efficiency relates to maximizing of welfare (happiness)
- Equity relates to notions of fair distributions (of welfare)
- Equity and efficiency issues cannot be solved independently (Arrow, 1963)
- Both very important when it comes to health and health care
Dismal science
- Core assumptions: desires/needs are infinite, yet resources are limited
- Scarcity - never enough resources to satisfy all human wants and needs
- Available resources used to maximize outcomes/goal (e.g. happiness, welfare, health)
- In decisions with effects across people, equity plays a role as well
- Rationing at core of economics - a dismal science?
- Rationing is inevitable due to scarcity
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
- Normally, preferences, prices and budget restrictions determine outcomes
- Individuals maximize utility and make own choices about own consumption and take income
and prices as given
- Utility is gained by buying and consuming goods at a price at or below what they are willing
to pay from profit-maximizing firms without market power selling at a price they are willing
to accept (equal to marginal costs)
‘Perfect market’: many buyers and many suppliers
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,The different buyers all want to maximize their own happiness etc.
When the supply curve falls below the demand curve, people will not buy anymore. The equilibrium
price has been reached.
Optimality
- Markets steer, through price mechanism, towards an equilibrium
- Equilibrium equals supply and demand
- Under a number of (strict) assumptions, such an equilibrium can be seen as optimal (i.e.
welfare maximizing, Pareto optimal)
- Individuals maximize own utility, are best judges of own welfare, have perfect knowledge
about prices and characteristics of all available goods
- Income distribution is not questioned and determines purchasing power
Health care is different…
- The assumptions underlying economic textbooks are not valid for health care
- Many deviating characteristics cause that leaving health care provision to market forces will
not lead to optimal outcomes
- That implies that government intervention in the health care sector may be necessary to
attain “better” results
- This holds both for reasons of efficiency and for reasons of equity
- Markets do not result in optimal (efficient) outcomes in health care due to specific
characteristics (See Arrow, 1963)
o Uncertainty and consequences of insurance
With an insurance you will act different in the health market
o Information asymmetry between consumers and suppliers
o Existence of externalities
For example vaccinations, you do not only protect yourself, but also protect
the rest of the people
- Moreover, strong concerns for equity in relation to health can make efficient outcomes
unacceptable (i.e. inequitable)
Statement on NHS in UK
- The government ... wants to ensure that in the future every man, woman and child can rely
on getting ... the best medical and other facilities available; that their getting them shall not
depend on whether they can pay for them or any other factor irrelevant to real need.
- This goes beyond correcting some market failures…
- Allocation and rationing no longer ‘up to the market’
Rationing
Breyer (2013) distinguishes general economic rationing and the type central in this course:
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, “These methods can be divided into those that make use of the price mechanism (“price rationing”)
and those that do not (“non-price rationing”), the latter being synonymous with rationing in its
narrow sense. More specifically, this latter concept can be defined as the allocation of limited
amounts below market price, which often means “free of charge”.”
Rationing in this course thus often presupposes (the possibility of) some kind of collective financing
of the good in question, but can still result in types of rationing that leave allocation to market (e.g.
no coverage).
Allocation and rationing
- In government regulated markets without (full) price mechanisms, also decisions regarding
allocations / priority setting / rationing need to be made somehow
- I may not be able to afford a drug that costs $300,000 and would give me some additional
health, but a collectively financed system could still enable me to get it (for free or e.g. a
copayment of $3,000)
- How do we now determine which care should be available for specific groups (and when and
under which circumstances)?
- Or should there be no limit?
The great escape: ethics
“At least as long I am Minister of Health, I shall never lead a debate on rationing or prioritization, for
ethical reasons”
(Philipp Rösler 2010)
Ethical position?
“There is a large group of objectors against health economics who believe it is contrary to medical
ethics. In the extreme, these people believe that it is the doctor’s duty to do everything possible for
the patient in front of him, no matter what the costs.
But in a resource-constraint system, ‘costs’ means ‘sacrifice’ (in this case the value of benefits
foregone by the person who did not get treated).
Thus, ‘no matter what the costs’ means ‘no matter what sacrifice borne by others’. This does not
sound to me like a very ethical position to be in.”
(Alan Williams)
Health care rationing
- Health care costs and demands increasing – pressure on budgets
- How to allocate scarce health care resources optimally?
- That means choose what to do and hence what not to do (rationing)
- Scarcity in health care denied: ‘The first lesson of economics is scarcity…’ … “… the first lesson
of politics is to disregard the first lesson of economics…”
- All systems deal with scarcity, balancing goals of efficiency, equity, …
- Setting priorities/rationing, implicitly or explicitly, through coverage, budgets, (co)payments,
incentives, waiting times, formal vs informal care, quality, … => the core of this course!
Why is health care rationing such an issue?
- Health (care) is a special good
- Central to human flourishing, capabilities and utility
- Strong feelings of solidarity (esp. in Europe) regarding health
- In many countries much health care is available ‘free’
- Setting limits (esp. by others) to access/coverage seen as indefensible
- ‘If it works, we should reimburse it’…
- Rationing shows a tension around fundamental aim of many systems
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