How Republicans And Democrats Choose To ‘Ration’ Your Health Care

Yesterday, during an appearance on MSNBC, GOP presidential hopeful Rick Santorum argued that up until Obamacare, “seniors could go in and use much they wanted, there was no limit or no control.” “Obamacare changed that. There is now this 15 member board that’s now going to enforce caps on Medicare…there are going to be cuts in Medicare, there is going to be lines, there is going to be rationing of care.” That’s the mindset Jonathan Cohn must have been thinking of when he wrote this important post alerting Republicans to the fact that “rationing” is inevitable and exists in today’s system — the only question is who does it:

Rationing is already a fixture of our health care system. It happens every time an insurer says no to a treatment. It happens every time a doctor or hospital recommends against a procedure because it doesn’t seem worth the cost. And it happens every time somebody forgoes care because it’s too expensive. […]

At the moment, Medicare does its rationing primarily (not exclusively) by limiting what it pays hospitals and doctors. Under the Affordable Care Act, Medicare would limit payments even more aggressively. Republicans and fellow conservative travelers regularly excoriate these efforts as “price controls” or “socialism.” This might come as a surprise to George H.W. Bush, who first applied these changes to physician reimbursement, or to the late Ronald Reagan, who first imposed them on hospitals.

Of course, the Affordable Care Act doesn’t merely direct Medicare to cut payments more aggressively. It also directs Medicare to cut payments more judiciously, by offering financial incentives to push doctors, hospitals, and other providers or producers of care to be more efficient. As I’ve written before, optimists like myself think that this mix of “payment reforms” will allow Medicare to provide medical care of the same or better quality while spending fewer taxpayer dollars.

Democrats “ration” care — to use their language — by establishing the Independent Payment Advisory Board (IPAB), a 15-member commission that would make recommendations for lowering Medicare spending to Congress if costs increase beyond a certain point. The various stakeholders in health care — drug companies, hospitals, doctors, patients (all of whom are nominated by the president and confirmed by the Senate) would recommend lowering provider reimbursement rates — they are barred from directly rationing patient care — in a transparent, public, and accountable manner. Congress would then vote on their proposal. Democrats also invest in payment reform to improve efficiency, Cohn notes.


Republicans do this differently. As Princeton economist Uwe Reindhart put it in an email to Cohn, “Republicans favor rationing by price and ability to pay, that is, by income class, through the market place. In other words, the fight is over the distributive ethic that should govern health care.” Those are the two choices; now it’s just up to the voters.