MEDICINE,
SCIENCE AND SOCIETY
How Should Medical Care Be Rationed? DAVID MECHANIC,
A
larm over increasing costs of medical care is pushing such issues as access. quality, and appropriate scientific and educational ventures off the nation’s agenda. In fiscal year 1977 we spent $163 billion for health care, amounting to $737 per capita [l]. Costs in health care continue to rise faster than the gross national product and exceed inflation in other sectors. It is hardly surprising, thus, that cost containment constitutes the highest priority for health administrators with fiscal responsibility. It is widely appreciated that a system of third-party insurance with open-ended payment on a fee-for-service basis offers little hope for constraints over continuing escalations in cost. With the emergence of new knowledge and improved technology, the increase of available physicians and other manpower, and the growth of financial entitlement, the prospects of cost control under present modes of practice are rather bleak. The prospect is that medical care in the future will be more stringently rationed. Reference to rationing for many physicians is analogous to holding a red flag in front of a bull. Following my article on this topic in a widely read medical journal [2], I received many responses, some simply reflecting hurt, others angry and insulting. Rationing, they argued, was an odious concept, and life would be better if social planners found some other occupation with which to concern themselves. Although fully aware that “rationing” is an inciting term to many, and that the discussion can proceed on more familiar and “acceptable” grounds, I persist in the use of the term because I regard it essential that physicians be aware of economic realities and the trade-offs they will have to face in the coming years [3]. The way we define terms affects our perceptions. Middle-class Americans, for example, who own their own homes are unaware of the fact that they receive a large housing subsidy through our tax system because the deduction
Ph.D.
for mortgage interest is not clearly labeled. This lack of awareness affects their views of subsidies for the poor and distorts their perceptions of equity. Medical care is rationed whether we like it or not, and we would do well to direct attention to the way such rationing can be applied to promote fairness, professional excellence, and the best use of our financial and social resources. There are generally three major approaches to rationing care. Most prevalent is cost sharing, such as coinsurance and deductibles, which serves to inhibit the purchase of some types of medical services. Although cost sharing relieves the burden on the taxpayer or on insurance programs, it differentially affects the poor as compared with the affluent, inhibits necessary as well as “trivial” care, is burdensome and costly to administer, is unpopular, and encourages evasion and deception. Although cost sharing will certainly remain a component of rationing, other approaches are gaining ascendancy. The alternatives are to ask physicians to make rationing choices by imposing restraints on the resources available to them or by making explicit policy decisions on the care that will and will not be available, and under what circumstances. Administrative guidelines in federal health programs increasingly do this. Implicit rationing refers to limitations on resources, such as in capitation or prospedtive global budgeting, and limitations on numbers of beds, available specialist positions, residency slots and the like. In such cases, policymakers do not specify the decisions that physicians should make but rather put them in a position in which they must consider their choices more carefully. Inefficiencies in the care of some patients affect what the physician will be able to do for others. Implicit rationing is the costcontainment device most typically used by health maintenance organizations and by the English National Health Service. There is no attempt to specify how
Dr. Mechanic is ]ohn Bascom Professor and Director of the Center of Medical Sociology and Health Services Research at the University of Wisconsin. He has authored many books on politics, medicine, and the social sciences. In 1976 he published A RIGHT TO HEALTH and GROWTH OF BUREAUCRATIC MEDICINE. His book on the topic of this discussion, FUTURE PROBLEMS IN HEALTH CARE, will be published in Ianuary 1979. Requests for reprints should be addressed to Dr. David Mechanic, Center for Medical Sociology and Health Services Research, University of Wisconsin, Social Science Building, Madison, Wisconsin 53706. Manuscript accepted September 6, 1978.
8
January 1979
The American Jolirnal of Medicine
Volume 88
MEDICINE. SCIENCE AND SOCIETY
physicians should practice, nor are there limitations on their professional discretion. There is insistence, however, that they work within economic constraints. What these constraints will be must be decided through a political dialogue reflecting public expectations, medical needs, and existing knowledge and technology. An alternative to physician rationing is for administrators to decide the types of care that will be paid for. This is typically done by insurance companies when they exclude or limit payment for certain services such as psychotherapy, dentistry and optometry. Although such exclusions have usually applied to entire areas of service, there is no logical requirement that explicit rationing be restricted in this way. In theory, explicit decisions can be made about payment for selected diagnostic, therapeutic or rehabilitative services. Such decisions, however, unlike implicit rationing, are direct efforts to limit physician autonomy and discretion. There are many arguments both for and against each of the rationing alternatives. Although implicit rationing would seem least threatening to the physician’s traditional role definition and professional stance, at least one observer has maintained that it is contrary to medical ethics [4]. The fact is that all these alternatives and possible combinations require more study and discussion, but unless we confront the issue that rationing is increasingly taking place, a useful dialogue is unlikely to develop. Future uncertainties and dilemmas are plentiful. How are we to increase efficiency of organization without eroding the possibility of choice which is a central value? That this is possible even in a leaner system is suggested by the success of dual choice in insurance coverage. Dual choice not only gives the patient options; it also protects the physician and health plan from disgruntled and disruptive patients. How are we to ensure that physician decisions on resource allocation are not overly influenced by more sophisticated, aggressive and demanding patients, whereas those with greater needs,
but who are more passive, receive less? What incentives will best ensure not only appropriate treatment, but also the responsiveness and sensitivity of the physician, as well as a desire for continuing education and professional mastery? We have ample evidence that capitation, without other incentives or rewards, fails to encourage optimal effort or commitment. Changing modes of financing and practice will require new approaches to accountability, professional relationships, and practitioner and patient rights. The tightening of budgets and modification of freedom to do as one wishes are always painful and frequently threatening. And the introduction of new modes of financing and organization is often associated with poorly designed regulations, insensitive guidelines, and failures to anticipate the way patients and professionals will actually respond [5]. Changes in financing and organization are inevitable, but the character of change and the way it is applied are not. Quality of future medical care will best be enhanced if physicians take part in a discussion of the way to ration sensibly and with fairness rather than insist that the idea is itself heretical. REFERENCES 1.
Health Care Financing Administration Notes, May 1978. Washington, DC, Department of Health, Education. and Welfare. 2. Mechanic D: Approaches to controlling the costs of medical care: short-range and long-range alternatives. N Engl J Med 298: 249,1978. 3. Mechanic D: Future Problems in Health Cart: Social Policy and Rationing of Medical Services. New York. Free Press. 1979. 4. Fried C: Rights and health care-beyond equity and efficiency. N Engl J Med 293: 241. 1975. 5. Mechanic D: The Growth of Bureaucratic Medicine: An Inquiry into the Dynamics of Patient Behavior and the Organization of Medical Care, New York, Wiley-Interscience, 1976.
January 1979
The American Journal of Medicine
Volume 66
9
SCIENCE AND SOCIETY
How Should Medical Care Be Rationed? DAVID MECHANIC,
A
larm over increasing costs of medical care is pushing such issues as access. quality, and appropriate scientific and educational ventures off the nation’s agenda. In fiscal year 1977 we spent $163 billion for health care, amounting to $737 per capita [l]. Costs in health care continue to rise faster than the gross national product and exceed inflation in other sectors. It is hardly surprising, thus, that cost containment constitutes the highest priority for health administrators with fiscal responsibility. It is widely appreciated that a system of third-party insurance with open-ended payment on a fee-for-service basis offers little hope for constraints over continuing escalations in cost. With the emergence of new knowledge and improved technology, the increase of available physicians and other manpower, and the growth of financial entitlement, the prospects of cost control under present modes of practice are rather bleak. The prospect is that medical care in the future will be more stringently rationed. Reference to rationing for many physicians is analogous to holding a red flag in front of a bull. Following my article on this topic in a widely read medical journal [2], I received many responses, some simply reflecting hurt, others angry and insulting. Rationing, they argued, was an odious concept, and life would be better if social planners found some other occupation with which to concern themselves. Although fully aware that “rationing” is an inciting term to many, and that the discussion can proceed on more familiar and “acceptable” grounds, I persist in the use of the term because I regard it essential that physicians be aware of economic realities and the trade-offs they will have to face in the coming years [3]. The way we define terms affects our perceptions. Middle-class Americans, for example, who own their own homes are unaware of the fact that they receive a large housing subsidy through our tax system because the deduction
Ph.D.
for mortgage interest is not clearly labeled. This lack of awareness affects their views of subsidies for the poor and distorts their perceptions of equity. Medical care is rationed whether we like it or not, and we would do well to direct attention to the way such rationing can be applied to promote fairness, professional excellence, and the best use of our financial and social resources. There are generally three major approaches to rationing care. Most prevalent is cost sharing, such as coinsurance and deductibles, which serves to inhibit the purchase of some types of medical services. Although cost sharing relieves the burden on the taxpayer or on insurance programs, it differentially affects the poor as compared with the affluent, inhibits necessary as well as “trivial” care, is burdensome and costly to administer, is unpopular, and encourages evasion and deception. Although cost sharing will certainly remain a component of rationing, other approaches are gaining ascendancy. The alternatives are to ask physicians to make rationing choices by imposing restraints on the resources available to them or by making explicit policy decisions on the care that will and will not be available, and under what circumstances. Administrative guidelines in federal health programs increasingly do this. Implicit rationing refers to limitations on resources, such as in capitation or prospedtive global budgeting, and limitations on numbers of beds, available specialist positions, residency slots and the like. In such cases, policymakers do not specify the decisions that physicians should make but rather put them in a position in which they must consider their choices more carefully. Inefficiencies in the care of some patients affect what the physician will be able to do for others. Implicit rationing is the costcontainment device most typically used by health maintenance organizations and by the English National Health Service. There is no attempt to specify how
Dr. Mechanic is ]ohn Bascom Professor and Director of the Center of Medical Sociology and Health Services Research at the University of Wisconsin. He has authored many books on politics, medicine, and the social sciences. In 1976 he published A RIGHT TO HEALTH and GROWTH OF BUREAUCRATIC MEDICINE. His book on the topic of this discussion, FUTURE PROBLEMS IN HEALTH CARE, will be published in Ianuary 1979. Requests for reprints should be addressed to Dr. David Mechanic, Center for Medical Sociology and Health Services Research, University of Wisconsin, Social Science Building, Madison, Wisconsin 53706. Manuscript accepted September 6, 1978.
8
January 1979
The American Jolirnal of Medicine
Volume 88
MEDICINE. SCIENCE AND SOCIETY
physicians should practice, nor are there limitations on their professional discretion. There is insistence, however, that they work within economic constraints. What these constraints will be must be decided through a political dialogue reflecting public expectations, medical needs, and existing knowledge and technology. An alternative to physician rationing is for administrators to decide the types of care that will be paid for. This is typically done by insurance companies when they exclude or limit payment for certain services such as psychotherapy, dentistry and optometry. Although such exclusions have usually applied to entire areas of service, there is no logical requirement that explicit rationing be restricted in this way. In theory, explicit decisions can be made about payment for selected diagnostic, therapeutic or rehabilitative services. Such decisions, however, unlike implicit rationing, are direct efforts to limit physician autonomy and discretion. There are many arguments both for and against each of the rationing alternatives. Although implicit rationing would seem least threatening to the physician’s traditional role definition and professional stance, at least one observer has maintained that it is contrary to medical ethics [4]. The fact is that all these alternatives and possible combinations require more study and discussion, but unless we confront the issue that rationing is increasingly taking place, a useful dialogue is unlikely to develop. Future uncertainties and dilemmas are plentiful. How are we to increase efficiency of organization without eroding the possibility of choice which is a central value? That this is possible even in a leaner system is suggested by the success of dual choice in insurance coverage. Dual choice not only gives the patient options; it also protects the physician and health plan from disgruntled and disruptive patients. How are we to ensure that physician decisions on resource allocation are not overly influenced by more sophisticated, aggressive and demanding patients, whereas those with greater needs,
but who are more passive, receive less? What incentives will best ensure not only appropriate treatment, but also the responsiveness and sensitivity of the physician, as well as a desire for continuing education and professional mastery? We have ample evidence that capitation, without other incentives or rewards, fails to encourage optimal effort or commitment. Changing modes of financing and practice will require new approaches to accountability, professional relationships, and practitioner and patient rights. The tightening of budgets and modification of freedom to do as one wishes are always painful and frequently threatening. And the introduction of new modes of financing and organization is often associated with poorly designed regulations, insensitive guidelines, and failures to anticipate the way patients and professionals will actually respond [5]. Changes in financing and organization are inevitable, but the character of change and the way it is applied are not. Quality of future medical care will best be enhanced if physicians take part in a discussion of the way to ration sensibly and with fairness rather than insist that the idea is itself heretical. REFERENCES 1.
Health Care Financing Administration Notes, May 1978. Washington, DC, Department of Health, Education. and Welfare. 2. Mechanic D: Approaches to controlling the costs of medical care: short-range and long-range alternatives. N Engl J Med 298: 249,1978. 3. Mechanic D: Future Problems in Health Cart: Social Policy and Rationing of Medical Services. New York. Free Press. 1979. 4. Fried C: Rights and health care-beyond equity and efficiency. N Engl J Med 293: 241. 1975. 5. Mechanic D: The Growth of Bureaucratic Medicine: An Inquiry into the Dynamics of Patient Behavior and the Organization of Medical Care, New York, Wiley-Interscience, 1976.
January 1979
The American Journal of Medicine
Volume 66
9
