NCPA


Excerpted From: Twenty Myths About National Health Insurance

December 1991
W60

Methods of Rationing

Figure I compares the availability of modern medical technology in the United States and Canada. As the figure shows:"American patients have much better access to modern medical technology than Canadian patients."

Note that the figures contrast the United States with Canada two years later. Contrasting the two countries in the same year would reveal an even greater disparity. While critics of the U.S health care system claim that we have too much technology, all the evidence suggests that Canada has too little - as a result of the conscious decisions of government officials. Doctors in British Columbia have taken out full-page newspaper advertisements warning that their patients’ lives are endangered by government’s refusal to purchase lifesaving medical technology.

"There are more MRI scanners in Washington state than in all of Canada."

It is easy to understand why these and other Canadian doctors are complaining. Consider what the shortage of diagnostic equipment means for patients:

Access To Modern Medical Technology in Britain.

In an extensive study of Britain’s National Health Service (NHS), Brookings Institution economists estimated the number of British patients denied treatment each year, based on U.S. levels of treatment. Most of the patients suffered from life-threatening diseases and the denial of treatment meant certain death.

"The British system denies treatment to 9,000 kidney patients, and as many as 15,000 cancer and 17,000 heart patients each year."

Table II presents these estimates, along with estimates of what it would cost the NHS to bring British treatment up to U.S. standards. As Table I shows:

Willingness to Adapt to New Technology.

Some argue that countries with national health insurance delay the purchase of expensive technology in order to see if it works and is cost-effective. If true, the downside of this approach is that patients are denied access to lifesaving treatment while government bureaucracies evaluate it.

"The United States adopts lifesaving medical technology more rapidly than most other countries."

During the 1970s, for example, lifesaving innovations were made in kidney dialysis, CAT scanning and pacemaker technology. Yet as Table II shows:

"Although Britain invented the CAT scanner and codeveloped renal dialysis, its use of both technologies is one of the lowest in Europe."

One could argue that the "need" for technology varies from country to country. For example, the incidence of chronic renal failure may be higher in the United States than in other developed countries. Even if this were true, however, a comparison of Tables II and III shows that every country had substantially increased the number of patients being treated by 1984, when even East Germany was treating more patients than Britain or Canada had treated eight years earlier.

The Politics of Medical Technology.

It would be a mistake, however, to think of the current U.S. health care system as ideal. The United States has not always been the first country to adopt new technology (even technology that works and is cost-effective). We do not always purchase the most technology. And we have not always made cost-effective choices among competing technologies.

In 1970, before a dialysis benefit was extended to the entire population under Medicare, the U.S. treatment rate for patients with renal failure was on a par with Britain’s and less than half that of Sweden and Denmark. Only after Medicare provided a virtual blank check did the U.S. treatment rate soar.

"Kidney patients who do not receive dialysis or a transplant presumably die."

How we treat kidney patients was also dictated by government reimbursement policies. Studies show that home dialysis is less expensive than dialysis in a hospital or clinic and, prior to the Medicare expansion, about 40 percent of U.S. dialysis treatment was home-based. But because Medicare gave physicians incentives to avoid home-based dialysis, the rate fell to 12 percent by 1978. There is also evidence that kidney transplants are more cost-effective (over the long run) than dialysis. But because Medicare reimbursement policy favored dialysis, the United States was 12th of 20 developed countries in the percent of kidney patients treated by transplant in 1985.

A more recent technological innovation is extracorporeal shock wave lithotripsy (ESWL) to disintegrate kidney stones and gallstones and eliminate the need for surgery. In 1989, the U.S. rate of lithotripters per capita was exceeded by rates in Germany (where ESWL was invented) and Belgium.

Overall, the best way to think about government policies toward technology is in terms of the politics of medicine. As the role of government expands, health care tends to evolve from a pro-technology phase to an antitechnology phase. In the first stage, government tends to spend on items perceived as under-provided by the market or by conventional health insurance. Thus, practically every less-developed country has used government funds to build at least one modern hospital, usually in the largest city, and to stock it with at least one example of each new technology - even though the vast majority of citizens lack basic medical care and public sanitation.

As government’s role in medicine expands, more and more interest groups must be accommodated. In this stage, government policy tends to be antitechnology because the small number of people who need the technology are so heavily outnumbered. Along the way, these general trends may be violated with respect to any particular technology because of the varied, even random, ways in which special interest pressures are exerted. We analyze the politics of medicine in more detail below.

"Because of the politics of medicine, governments have a bias against modern medical technology."

When the United States had a pure cost-plus health care system, technology tended to be adopted quickly because physicians " unconstrained by considerations of cost " found the technology useful. When the role of government was minimal, it was easier to acquire public funds where conventional insurance coverage was lacking (e.g., kidney dialysis and organ transplants). It is not surprising that the United States made great use of technological innovations.

Our experience in the future may be very different, however. In the United States we pay more for health care. We also get more. And what we get may save our lives. But increasingly, our health care system is acquiring the characteristics of the health care systems of other countries, in which access to medical technology is determined by rationing and politics.

Rationing by Waiting.

Virtually every government which has established a system of national health insurance has proclaimed health care to be a basic human "right." Yet far from guaranteeing that right, most national health systems routinely deny care to those who need it. Not only do citizens have no enforceable right to any particular medical service, they don’t even have a right to a place in line when health care is rationed. The 100th person waiting for heart surgery is not "entitled" to the one hundreth surgery, for example. Other patients can, and do, jump the queue for any number of reasons.

"People waiting for surgery: 25,000 in New Zealand, 250,000 in Canada and more than one million in Britain."

By U.S. standards, one of the cruelest aspects of government-run health care systems is the degree to which these systems engage in non-price rationing. Take the health care systems of Britain and New Zealand, for example. In both countries, hospital services are completely paid by government. Both also have long waiting lists for hospital surgery:

On the surface, the number of people waiting may seem small relative to the total population - ranging from 1 percent in Canada to almost 2 percent in Britain. However, considering that only 16 percent of the people enter a hospital each year in developed countries and that only about 4 percent require most of the serious (and expensive) procedures, these numbers are quite high. In New Zealand, for example, there is one person waiting for surgery for every three surgeries performed each year.

"Patients can wait in pain or discomfort for years, and the wait for many is risking their lives."

"Canadians wait as long as five months for a Pap smear, eight months for a mammogram and a year and four months for an MRI scan."

In Britain and New Zealand, elderly patients in need of a hip replacement can wait in pain for years, and those awaiting heart surgery often are at risk of their lives. Perhaps because Canada has had a national health care program for only half as long, the rationing problems are not as great as they are in Britain and New Zealand, although all three countries have similar cultures. But because the demand for health care has proved insatiable, and because Canadian provincial governments severely limit hospital budgets, the waiting lines for surgery and diagnostic tests are growing:

"Patients in British Columbia can wait up to a year for routine procedures."


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