Wednesday, April 06, 2011

Rationing Health Care

Wolfgang -

"Why is the growth in health care spending in the US outstripping that in the rest of the developed world?" because in many countries (e.g. in the European country where I live) health care spending is capped (similar to what Ryan-Rivlin proposes by the way). This means e.g. in Germany or Austria that a personal care physician has a budget for each quarter which he/she cannot exceed (and they have to stop writing expensive prescriptions when they reach their budget limit. And no this is not a joke.)

If I may risk a paraphrase, Wolfgang is pointing out that the only sure way to contain medical costs is to ration what care insurance will pay for. I agree and so does Krugman. One approach to this is based on having experts evaluate the effectiveness of treatments and specify those eligible for coverage. Our Republican friends styled these as "death panels." Another approach is provide some subsidies and let insurance companies decide who gets care - that's the approach Ryan likes. (Contrary to what WB insinuates, Ryan is not Ryan-Rivlin).

Now my knowledge of Austrian health care (considered by some to be the best in Europe) is limited but doesn't gibe very well with the impression Wolfgang gave me - that if you got sick late in the quarter, you could forget about treatment. Compare, e.g., from the linked document:

Social health insurance covers the following benefits: • medical services in the primary sector, including physiotherapeutic, ergotherapeutic and logotherapeutic treatment, as well as psychotherapy • drugs, therapeutic products, medical aids • dental treatment, dentures • hospital care • medical home care • sickness benefits • maternity benefits • medical rehabilitation • health protection and disease prevention (spas) • early detection of disease and health promotion • travel expenses and transport costs. As a rule, benefits which qualify as social health insurance benefits can be obtained without limits and regardless of personal income. Benefits, which are not (or not yet) included in the obligatory health insurance coverage must be applied for and approved by the “head doctor” (employed by the health insurance fund). In order for any benefit to be included as an obligatory health insurance benefit, the professional associations must negotiate in detail access to and regional distribution of service providers, the reimbursement rates and the observance of quality standards. This process occasionally may take longer than what is deemed convenient for the parties and patients involved, but is a necessary prerequisite to ensure balanced supply (horizontal equity), uniform fees and observance of quality criteria.

My gripe with Ryan's plan is that it, like Medicare Advantage and every other Republican health care proposal I can remember, is that it is designed not to heal the sick and keep the well healthy, but to enrich drug and hospital corporations. If you look at the financial history of American health care since Reagan, you can see just how effective this system has been at extracting rents from patients and the government and enriching those corporations.