Iowa Law Professor Calls for Less Honesty About Health Care Rationing

Released: 4/14/2011 4:20 PM EDT
Source Newsroom: University of Iowa
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Citations Journal of Corporation Law

Newswise — It's always better when government does its business in the sunshine, but a University of Iowa law professor says that when it comes to health care, a little too much sun might be a bad thing.

As public officials grapple with the soaring costs of Medicare and other health care programs, they have correctly recognized the need to ration our health care dollars, said David Orentlicher, a professor in the UI College of Law and a health care law expert. He notes in a new study that while last year's health care reform law expands health insurance coverage, it does little to control costs. Health care spending already consumes nearly 20 percent of the country's GDP and costs are expected to continue to rise by 6.7 percent a year between 2015 and 2019.

"Kicking the cost problem down the road cannot continue indefinitely because there are only so many health care dollars we can spend, whether through public or privately-funded insurance," he said. "The question for policymakers is not whether to ration health care, but how to do so."

Policy makers have recently been issuing proposals to contain costs. Wisconsin Congressman Paul Ryan's budget outline would cap Medicare spending by issuing vouchers to recipients that they could then use to shop for their own insurance. And on Wednesday, President Barack Obama said he would reduce Medicare costs by finding greater efficiencies and cutting waste.

But while public officials and health policy experts differ in their specific proposals, they generally agree that any decisions be made after broad public input. Orentlicher agrees with this in theory.

"If people are going to be denied medical tests or treatments that might preserve their life or maintain their health, we ought to ensure that all members of society have a voice in the decision making process," he said.

However, he said that from a practical social and political viewpoint, public processes for making rationing decisions will not work and points to numerous failed attempts from the past. For instance, when kidney dialysis first became available in the 1960s, machines were so rare that not everyone who needed dialysis could get it. Some hospitals dealt with this shortage by creating committees to decide who would receive dialysis and who would not. But the committees' life-or-death decision-making power proved so controversial that Congress eventually expanded Medicare to guarantee dialysis to anyone who needed it.

A more recent example, from 2009, is also telling. That year, a federal task force revised breast cancer screening guidelines to recommend most women wait until age 50 to receive a mammogram, instead of age 40. Orentlicher said an immediate public backlash led to the repudiation of the recommendation within days of its release.

"When Americans try to make choices about access to life-preserving medical care, public, transparent processes fail," he said. "Either the process never makes the difficult choices that are needed, the difficult decisions that are made unravel and are abandoned, or the decision-making process itself is abandoned."

Instead, Orentlicher suggests using "the invisible hand of the market" to contain costs by changing doctors' compensation from fee-for-service to salary. The current system, he said, encourages doctors and hospitals to order more care, prescribing tests and treatments that are costly but frequently unnecessary, increasing costs for everyone. If doctors were paid a set salary instead of by the procedure, he said they would have an economic incentive to become more cost effective and order fewer unnecessary procedures. Reducing the number of procedures then acts as an implicit, market-based health care rationing system.

"When physicians and hospitals no longer have incentives to provide more care, they will naturally tend toward providing less care," he said. "As they reduce their level of care, they automatically will make allocation decisions among different patients."

Orentlicher's paper, "Controlling Health Care Costs through Public, Transparent Processes," will be published in a forthcoming issue of the Journal of Corporation Law.


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