Healthcare Cost Containment Part II: Can Rationing Be Rational?

By David A. Kindig, MD, PhD

Rationing: A systematic method for limiting access to a good or service when demand exceeds supply. New World Dictionary

Arizona has had a lot of attention this past week for its recent decision to eliminate certain transplants for Medicaid recipients. The New York Times’ coverage alone included a general article, an analysis piece, and an op-ed that together prompted intense and mostly negative feedback from over 900 readers before comments were finally closed.

If the Times is correct in asserting that the Arizona cuts are a “sign of the times,” we’ve got a challenging road ahead in navigating the politics and ethics around the difficult and often contentious topic of healthcare rationing. As I noted last week, the Affordable Care Act charges CMS with developing recommendations to keep Medicare inflation in line with GDP increases over time. But the Act specifically prohibits proposals “that would ration care, increase revenues or change benefits.” Yet, how rationing will be defined in the context of the Affordable Care Act remains unclear. How might a population health perspective guide our thinking?

First, a population health perspective suggests that investments be prioritized according to the degree to which they will improve overall health outcomes and reduce disparities, be they racial, geographic, or socio-economic.

Second, a population health perspective encourages us to be relentless in identifying and eliminating excess and ineffective practices and procedures. This is not rationing, it is simply good medicine and good economics. A Baltimore cardiologist’s alleged misuse of cardiac stents (he supposedly implanted 585 medically unnecessary stents over a 2-year period at a cost to Medicaid of $3.8 million) provides a vivid example of a relatively common problem. As Cleveland Clinic’s Chief of Cardiovascular Medicine, Dr. Steven Nissen, said, “We’re spending a fortune as a country on procedures that people don’t need.”

Finally, a population health perspective implies that the reality of scarce resources requires difficult decision-making along a cost-benefit continuum. I believe that if caps are to be put on investments with limited or very expensive benefits, they should be made with the best evidence available and with maximum transparency. The best example of this was the Oregon Health Plan, which was prompted by a commitment to expand health care coverage for the state’s low-income population without additional funding. In 1989, the Oregon legislature created the Oregon Health Services Commission, which invited public input through town hall meetings on the process of ranking health care services according to importance, health impact, effectiveness, and cost. Although the approach was not perfect, it is an excellent example of a rational rationing process. This prioritization has resulted in healthcare coverage for 1.5 million Oregonians. In the United Kingdom, ”league tables” are used to guide investment decisions, ranking the quality adjusted life years saved per dollar invested for a given procedure.

So, can the Arizona decision be defended from a population health perspective? Perhaps, but only if the evidence is clear that new or deeper cuts in other sectors would be more damaging, that these are the least cost-effective programs in their Medicaid program, and that this evidence is transparent. And they would get more population health points if the savings went to preserving other more cost-effective health promoting programs instead of simply balancing the overall budget or reducing tax rates. Can we lower healthcare cost increases to close to GDP increases by just getting rid of wasteful and ineffective investments? I doubt it -- reform will likely require some form of rationing and continued clashing of goals and values. Stay tuned.

David A. Kindig, MD, PhD is Emeritus Professor of Population Health Sciences and Emeritus Vice-Chancellor for Health Sciences at the University of Wisconsin School of Medicine and Public Health.

Comments

[Marya Zilberberg, MD, MPH]

Great post! I think what bothered me about the AZ decision was not that it was particularly insensible -- a OLT is a huge commitment of resources, etc., that could perhaps be deployed more widely elsewhere. What bothered me most is exactly what you have identified: lack of transparency in reasoning, further advancement of disparities in access, and a rabid concern for the budget, possibly at the expense of the public's health. For this reason the isolated decision seemed irrational and even worse potentially hypocritical, since the Governor of the state is on record with her anti-government interference views. A rational and transparent process is what is desperately needed.

[Robert Stone Newsom, PhD]

As part of the state of Wisconsin's Medicaid Rate Reform 2 efforts, CHSRA at UW-Madison simulated the effect on WI Medicaid expenditures if the Oregon system as operating in 2009 was directly applied to the actual WI 2009 medical expenditures. The result was a projected annual savings to the state of approximately $55M. To date apparently the anticipated negative legislative response to the Oregon process has dampened any further action related to this obvious cost-saving but likely controversial approach.