The Politics of Healthcare Rationing

Is the fear of a private health insurance system that includes all Americans greater than the fear of diminishing benefits and increasing costs in the current system? Apparently it is, but that may be changing. Both political parties are selling fear when it comes to healthcare, and both parties imply rationing of benefits. Though no party wants to claim rationing as their foundation.

The Democrats want all Americans to be included through guaranteed issue private insurance policies, and cost sharing through community rating. Rationing is implied by the need to control premium costs similar to the way countries with national healthcare systems must control overall spending. High cost outlier treatments would begin to face stringent cost benefit analysis. The FDA is moving in this direction through more focus on outcomes studies. As The Wall Street Journal “Diabetes Drugs Face Tougher Rules” points out, the FDA is only interested in safety and efficacy.

Republicans want to ration healthcare through consumerism. The trouble is high deductable insurance plans cause consumers to defer lower cost health maintenance in favor of very high cost medical emergencies. Ideally, consumers would like to defer as much as possible until they’re 65 and eligible for Medicare. Then it does not matter to them if the government spends a fortune on catch up care. The Republicans want to further ration care by allowing private health insurers to reject applicants for any reason (medical underwriting). Hey, it’s a free market isn’t it?

From a realistic perspective, both parties are rationing. Democrats will ration high cost care to promote broader access to lower price care, and Republicans are currently rationing lower cost care to make high cost care available to the wealthier and older Americans. Almost all employees are now facing some form of deductables and co-pays. It is easy to see that every society rations healthcare; it is just that the Canadians, British and French do it differently than the Americans.

Only the wealthy and Medicare recipients take comfort in their health insurance. Everyone else is living with some degree of fear. Regardless of which party wins the White House, health insurance reform will depend on how the American people balance their fears. If the scale tips toward greater fear of the current system, major reforms will proceed. Otherwise it can be assumed that that “free market” politicians and medical service providers have been able to instill greater fear of the Canadian and European healthcare systems. It has not mattered that previous attempts at reform had no resemblance to those systems.

My primary interest is in the private health insurers and pharmaceutical companies. I believe that both will have greater prosperity with major healthcare reform. The customer base for private insurers will be greatly expanded and the government would most likely subsidize private insurers for high cost patients. (Note: High cost is not the same as high risk.) Currently, private insurers are rapidly losing customers.

Reform would allow pharma companies to sell more product with far less marketing and selling expenses. The difference is that drug use will be rationed by cost effectiveness. In business that’s called value adding.

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