Confessions of a Health Care Rationer

My son summarized my new situation with typical teenage irreverence: “Gee, Dad, after thirty years of providing health care, your new job is denying it.”

It’s a funny line, of course, if somewhat harsh. I’ll probably let him out of his room in a few weeks. But his quip is largely untrue. Its bite comes from the fact that it’s not entirely untrue.

It’s a strange turn of events, really. After all, I have always been opposed to healthcare rationing. But, then, I have always been opposed to aging, too. I have come to recognize the fundamental similarity between the two. They are simply unavoidable evils ( pace Chesterton, Cicero, et al.). The best we can do is to manage them with wisdom and compassion.

It’s a mistake to think of health care as a right. It is not a right; it is a good. Freedom of speech, by contrast, is a right, as is freedom of religious belief. They are privileges that inure to individuals as a consequence of the primordial right, free will. That is why we see them as inalienable. The exercise of these rights does not depend on any action of government, but rather on its inaction. Government may not legitimately interfere with their exercise, but nothing mandates that the government provide us with printing press or chapel.

Health care is different. It is more akin to the other goods which sustain life: food, clothing, and shelter. A well-ordered society exists to protect its members from the unlawful taking of life, and is structured to facilitate its members’ acquisition of these goods.

But health care differs from these other goods: First, health care is not absolutely essential for all people on a daily basis; second, there is an insufficient supply in this world to meet the demand of those who would have it. There is enough food in the world to feed everyone. Hunger and famine are the result of its inadequate distribution, not its absolute dearth. There are enough garments in the world to clothe everyone, and enough roofs to protect all from the rain. Health care, in contrast, is a far scarcer resource. Descartes once remarked that common sense is the most equitably distributed attribute in the world, because we never see anybody who feels he doesn’t have enough. Health care is not like common sense. We often see people who feel they don’t have enough, or at least can’t get enough at a price they’re willing or able to pay.

Until modern times, health care in the United States was distributed as most goods of life are distributed”according to personal wealth. The rich could afford it, and the poor couldn’t. Most economists would exclude this sort of market allocation as a form of rationing by definition. Nonetheless, market allocation is a form of distributing goods within a society, and when there are not enough of those goods to go around, the end-result in the short term is much the same.

Limiting health care’s availability by the criterion of personal wealth rightly offends our sense of the dignity of the individual. Are the lives of the poor not of the same intrinsic value of those of the wealthy? To be fair, it is rare in the United States that poverty alone prevents the uninsured poor from receiving lifesaving intervention in a healthcare crisis. A poor man having a heart attack is not turned away from the emergency room, nor is the poor woman in labor sent away to have her baby at home. (I am not arguing that such enormities never occur, but the fact that such occurrences remain scandalous and newsworthy is a testament to their rarity.) Yet it is equally undeniable that the poor get a lesser share of the preventive care that can maintain health or of the quotidian care for the less dramatic challenges to their health.

There are two major alternatives to the allocating of health care on the basis of personal wealth. Both involve a large number of individuals agreeing (or having imposed on them) that the amount of health care they receive will not be in strict accord to how much they have paid for it. The cost will be distributed over the healthy as well as the sick, even though the benefit will inure only to those who are ill or who need health care to prevent illness. People accept the certainty of a bearable cost to avoid the risk of an unbearable one. But to the extent that these collective programs sever the connection between paying for health care and receiving it, they generate increased demand for health care. The individual feels that he has already paid for health care. When he is sick, or thinks that he is sick, he feels fully entitled to care with no consideration of cost. After all, he has already paid for it, hasn’t he? Given the limited amount of health care that may be bought with the aggregate funds of the group, this untrammeled demand for it must always result in rationing. This is true whether the collective effort is a private insurance plan or a government program. Rationing is inevitable in all collective health care financing schemes .

Rationing must occur , but it need not be admitted . Denying the truth of rationing is more common in government-run health care schemes than private ones, because the government is reluctant to have the people know this ugly fact. Government-run programs, therefore, are more likely to disguise the rationing. This plausibly deniable form of limiting health care is called implicit healthcare rationing , and it assumes many forms. Rationing by termination occurs when patients are discharged from the hospital earlier than is medically optimal. Rationing by dilution occurs when second-best rather than first-best treatment is provided. Rationing by rejection or redirection involves healthcare providers turning away patients whose care will be inadequately reimbursed. This is commonly seen now in the Medicare and Medicaid programs, because those programs reimburse providers at a rate substantially lower than private insurance plans. Perhaps more common than those forms of rationing is rationing by delay, as exemplified by the outrageous amount of time patients in Canada must wait for hip replacement surgery or colonoscopy. The unifying theme in all these forms of implicit rationing is that, without admitting it, they force some patients to forego medical care that they want and are ostensibly entitled to receive.

Private insurance plans sometimes include an element of implicit rationing, but because they are, at heart, contractual agreements between the insurance company and the insured are more likely to ration health care explicitly. The many pages of the healthcare plan describe what is a covered service, which providers will be reimbursed for services, the duration of coverage, the dollar limit, and so on. The advantage of explicit over implicit rationing is obvious: It gives potential customers of the insurance plan information to use when deciding which insurance plan to buy, and gives them clear expectations of services to be delivered. Implicit rationing, by contrast, may have the sweetness of a promise, but is usually succeeded by the bitterness of a promise broken.

All modern societies ration health care. A wise society considers the options and chooses a method of doing so which best conforms to its values and capabilities. Thus we come to the terrible question we would so very much like to avoid: How shall we ration health care? How shall we explicitly ration it? So noxious a question is this, so offensive in its tacit assumptions and implications, that most politicians and wishful thinkers will deny that we need to address it at all. They will argue that the fundamental problem is one of distribution, not one of unmeetable demand. They will argue, with more enthusiasm than evidence, that an emphasis on preventive care would substantially reduce aggregate demand. Some will say we must reduce the role of government; others will argue that we should augment it. If only we will adopt their plan”they’ll say”waste, fraud, and abuse will be abolished. There will be chicken”or at least chicken soup”in every pot, and a vaccine in every arm. People love honesty, but they hate the truth. To frankly acknowledge and address the ineluctable reality of healthcare rationing is not merely to touch the proverbial third rail of American politics; it is to lie across the tracks in front of the onrushing train.

Come, let us speak of unpleasant things. How is health care to be rationed? Who gets the short end of the stick?

There are several rational approaches. An example of attempted explicit rationing of health care in a government-financed system may be found in Oregon. In 1994 Oregon implemented a program that would expand the number of poor people covered by Medicaid, but explicitly ration the care they receive. Oregon chose to priorate the different services that a patient might conceivably want, ranking them in order of how important the procedures were for maintaining life and promoting health. The legislature determined how much it was willing to spend for the health care of the poor, and then the bureaucrats literally drew a line across the list. All the services above the line would be covered by the state Medicaid plan; all those below would not. Thus, the solons of Oregon determined that treatment of veneral warts would be covered by the Oregon Health Plan; treatment of chronic anal fissures would not.

In practice, this procedure did not prove to be the efficient money-saver its developers envisioned. From the beginning, the list did not exclude procedures that were very expensive in the aggregate. The list needed continual updating and adjusting, often on the basis of nonscientific criteria, since the opinions of the taxpayers (which is a nice way of saying political pressure) had to be considered. In the first six years of the program, costs skyrocketed seventy-seven percent. Eventually, the state had to resort to admitting new enrollees to the insurance program on the basis of a lottery.

The political reality of the Oregon healthcare rationing is that it could be imposed by the taxpayers on the recipients of their largesse only because it was not being imposed on the taxpayers themselves. For government to explicitly ration the health care of those who are actually paying for it may be undoable in a democracy. That explains why healthcare rationing in Medicare and Medicaid is mostly implicit rather than explicit. It is noteworthy and instructive that no other state has followed Oregon’s lead in this approach.

An alternative to explicit government mandated healthcare rationing is rationing by private industry. There is one great advantage that private healthcare rationing has compared with government rationing: competition. In the private marketplace, there will be a number of insurers, each with its own criteria and implementation of rationing. A company which is unreasonable or high-handed in its coverage decisions will find that its unhappy customers soon become its former customers. It’s true that millions of Americans have their healthcare plan chosen for them by their employers. But employees, both as individuals and via unions, certainly have an impact on the choice of company health plans. Also, it must be kept in mind that the management of the company is almost always covered by the same healthcare plans offered to the rank-and-file employees.

While a variety of insurers, prices, and plans are available, the comparative shopper for healthcare insurance is still unlikely to find any insurance that does not have rationing as part of its processes; at best, he may find one whose criteria of rationing are more to his liking. It is to those criteria, the proverbial devilish details, that I now turn.

I am a consultant for one of the largest private healthcare insurers in the United States. Because chemotherapy agents are among the most expensive medicines that can be prescribed by a physician, the company wanted an experienced medical oncologist to help manage that expensive resource. When I first accepted the position, I had been worried that I might be pressured to make coverage decisions based on the cost of the medication. I wondered if I would be mensch enough to stand up to such pressure. To my relief, I have never been subjected to that kind of pressure. The pressure I have felt is quite a different one. My supervisors have frequently adjured me of the importance of being consistent in decision making. Since all the members of the health plan are paying premiums for the same insurance, they must all receive equal consideration. The only way to achieve that is by adhering to explicit policies based on sound medical evidence of medical necessity. Medical necessity is our touchstone. It is, frankly, the criterion by which we ration health care. If a service is medically necessary, it is covered. Otherwise, it is not.

The conundrum is surely obvious: What do we mean by medical necessity ? What are the criteria of determining medical necessity”and who decides?

The meaning of medical necessity is easy to state, if hard to pin down. The definition, part of the contract between the insured and the company, is this: services that a medical practitioner, exercising prudent clinical judgment, would provide to a patient to prevent, diagnose, or treat an illness. The definition further requires that such services be in accordance with generally accepted standards of medical practice, clinically appropriate for the patient, not primarily for the patient’s convenience, and not more costly than similar services likely to yield results which are at least as good.

I don’t suppose that I could come up with a better definition of medically necessary, but it is surely obvious that this definition requires heaping measures of interpretation. What is prudent ? What is generally accepted standards ? Requiring that services be medically necessary is unavoidable. Defining the terms is equally unavoidable, but the definition often seems tautological, like loopholes within knots all contorted into a grand Möbius band of potential disputation. The insurance company assembles panels of experts from within the company, academia, and private practice to meet regularly to assess the state of the art for a multitude of diseases and procedures. The panels, in turn, create the policies based on the current evidence. As to who implements the policy, who actually decides what is medical necessity on a case-by-case basis”that, too, is easy to answer: I do. I am the healthcare rationer.

I am not the only one, of course. Like any large bureaucracy we have a large, rational, and, yes, occasionally lumbering system of determining medical necessity. It would be wasteful for the insurance company to have professionals at the highest pay level authorize all these decisions. After all, the vast majority of claims are , indeed, for medically necessary services. Therefore, the initial review of claims is done by nurses or pharmacy technicians. They make their decision based on a carefully vetted, evidence-based checklist of criteria. The majority of these initial reviews end in an authorization for the requested service, and are never considered again within the company. It is important to note that the first-line reviewers have the authority to authorize a service, but not to deny it. If the claim for payment fails to pass the checklist, the first-line reviewer does not deny it, but rather passes it on to a higher level review by a physician.

Before I became a consultant to the insurance company, I shared the cynical view of most harried physicians. I believed that, just as luggage at the airport must surely be handled by behind-the-scenes gorillas who jump on the bags in madcap revelry, so medical claims at insurance companies must be handled by high-school dropouts who make their decisions by consulting articles such as “I am Joe’s Prostate” in well-thumbed copies of Reader’s Digest . Not so. The physicians who do the reviews are, for the most part, still in active practice, and, if not leaders in their fields, are clearly several notches above average. Hiring such qualified personnel is not merely a kindness to the insured members of the insurance plan; it is simply good management. If a company makes too many bad decisions, it will suffer in the courtroom, in corporate boardrooms, and on the floor of the stock exchange.

But the fact that good doctors are making decisions for the insurance company does not preclude disagreement between the insurance company and the providers. These providers of the contested medical services are, for the most part, also good doctors. When there is a disagreement between the two, who is right? We return to the conundrum of determining medical necessity.

On its face, one might think that the question of medical necessity is best answered by the physician who is actually taking care of the patient, rather than one who has never met him and is basing his decisions on a limited amount of information. But that will not do. That thought is one of the many illusory ways of denying the inevitability of rationing. To have the providers determine medical necessity is to have no limits at all on expenditures for health care, since all providers at all times believe (or at least claim) that the service they are providing is medically necessary. To have the providers be the arbiters of medical necessity is to abjure rationing altogether. The insurance company that does that will be very popular”very briefly. Then it will either go bankrupt in short order, or sharply adjust its premiums upward to have its income match its hemorrhaging outflow. If premiums rise enough, people will not buy the insurance. The result will quickly be the most generous insurance policy that nobody can afford.

So the insurance company must ration the health care, and must therefore sometimes disagree with the attending physician as to the medical necessity of the proposed treatment. It does this on the basis of published medical evidence.

This criterion of rationing by medical evidence, like all criteria of rationing, evokes protests from people who do not receive the health care to which they feel entitled. For example, what shall we do about people who have rare diseases? Cancer of the adrenal gland, for example, is a rare malignancy. On theoretical grounds we might feel that it would respond to an expensive drug like Avastin, but no clinical trial has addressed that question. It is such a rare disease that there will never be a clinical trial large enough to prove or disprove the benefit of Avastin in treating it. Are patients who have rare and relatively unstudied diseases never to have access to expensive treatments of theoretical but untested benefit?

Another consideration is that medical evidence is not an all-or-none affair. No cure bursts forth onto the medical world fully formed like Athena from the brow of Zeus. First laboratory or animal models of a disease suggest a line of approach. Then small studies assess the treatments’ toxicity and efficacy in humans. Larger clinical trials are performed only if these early studies are promising. These trials are first reported at meetings before the data are mature. Subsequent reports may apprise clinicians of the progress of the study. Only when the data are mature are they reported in toto, and it is usually a while after that before the new treatment wins FDA approval.

When is the evidence sufficient? Shall we consider the availability of other treatments in making the decision, or weigh the evidence on its own merits alone? There is no one right answer. As a clinician, I may recommend a treatment early in its development, sometimes on little more than a hunch (with the patient’s informed consent), if the patient has few options and a dismal prognosis. Years later I’ll learn whether the choice was right or not. But the health plan also must decide: Shall we authorize this treatment and necessarily restrict another treatment? If so, which one? I remind the reader: Rationing is inevitable. Only the criteria of rationing may vary.

While the application of any standard of explicit rationing must be equitable, at heart the criteria themselves cannot escape some element of arbitrariness. Whether the criteria are age of the patient, life expectancy with or without treatment, cost of the treatment, rigor of evidence, or simply public clamor”rationing everywhere and always means that someone is denied health care which he believes is necessary for his wellbeing and to which he feels entitled.

Imperfect as it is, using the criterion of medical necessity based on medical evidence is likely the most just and practical way of performing the unavoidable and unpleasant task of rationing health care. Implicit rationing is dishonest and procrustean, bluntly mismatching resources and needs. Rationing by age or life expectancy inevitably leads to decision making based on invidious, not to say immoral, comparisons of individual worth. Rationing primarily by cost obviates the fundamental purpose of having health insurance. Rationing by public clamor introduces the injustice of preferential treatment for those with the greatest political clout. The optimist will consider healthcare rationing based on evidence-based medical necessity as the best of all possible ways of doing it; the pessimist will fear that he’s right.

As Congress and the people consider restructuring the American healthcare system, they must keep in mind that rationing health care may not be undeniable, but it is unavoidable. To claim that Congress will devise a new federal healthcare plan that will not involve rationing is like claiming that it will invent a triangle that doesn’t have three sides. Currently, within the private sector of health care, we have a large number of private insurance companies vying for the business of their customers. They ration health care on the basis of evidence-based medical necessity. The Obama health plan, the details of which are still being worked out, will also ration health care. The alternative to that is an accelerated escalation of aggregate healthcare costs. But the single-payer system to which Obama’s plan will lead will have no competitor and no pressing financial incentive to please its customers. No competitor for the single payer means no alternative for the patient. We can reasonably expect that a single-payer system of rationing will be largely implicit rather than explicit, and governed as much by cost and political considerations as by medical evidence. Such a system would likely combine the fiscal responsibility of the Postal Service, the customer friendliness of the Bureau of Motor Vehicles, and the smooth efficiency of the Immigration and Naturalization Service.

You can bet your life on it.

Eric Chevlen, M.D., is a medical oncologist in Youngstown, Ohio.