Rationing of Health Care

Peter Singer wrote an interesting article for the New York Times which makes a good case for rationing health care on the basis of a ratio of the amount of money spent to the health benefits provided [1]. It’s obvious that given a finite amount of money to spend on health-care and a limited portion of the working population who can be employed in providing it there will be limits to the care that each individual can receive. Therefore it seems inevitable that some people will miss out on care that they need – sometimes to the extent of significantly decreasing the length or quality of someone’s life – at least until we can manufacture fully autonomous medical robots or other futuristic technology to greatly reduce the amount of person-time involved in providing medical care.

The majority of the article concerns the need for rationing health care. Really this is obvious, and it’s also obvious that it takes place right now all around the world. The article is mainly focussed on the US where private health insurance for everyone is being considered and people are afraid of government rationing of health care. But right now they have health care being rationed not for the purpose of saving other people but for the benefit of share-holders and executive bonuses! I wouldn’t really be thrilled if a government agency told me that instead of paying the necessary money to save my life they would rather pay the same amount of money to save two other people, but if a private company wanted to deny me treatment in order to pay the down-payment on another executive Mercedes I would totally flip out! Dr Gabriella Coleman (who is famous for her Anthropology research on “free and open source software hacking”) has written Housebreaking Your Health Insurance [2] to offer some tips for dealing with private health insurance companies in the US with the first tip being “Ideally you should tape record all conversations” – I think that single point adequately demonstrates the problem with health insurance (but there is a lot more).

In the common culture of the US, Australia, and Western Europe it is generally regarded that children are inherently more valuable than adults to such a degree that a choice between saving the life of a child or an elderly person really requires no consideration. So Peter advocates having a measure of the expected years of life remaining before determining an amount of money to be spent – this is logical, reasonable, and fits with the common moral standards in our society.

Peter then goes a bit off track when talking about putting seat belts in buses. One significant thing to consider is that there is a world of difference between preventing an injury and curing it. If you cure an injury then there will be some pain and suffering during the process and the result probably won’t be a full recovery. Being able to walk away from a crash because of a seatbelt is a really good thing (been there, done that).

But things really go awry when he starts talking about medical treatment for the disabled. Firstly he mentions quadriplegia as an extreme case, but to differentiate on the basis of disability you would have to categorise the various disabilities in order of severity. Then of course there are awkward issues such as comparing a quadriplegic who is employed in the computer industry (such as a former colleague of mine) and someone who is apparently fully capable but sleeps on a park bench.

He expressed the idea that someone who would give up a year of their life to cure a disability assigns a lower value to their life. By using that logic anyone who undertakes cosmetic surgery (which has a non-zero probability of a fatal outcome and therefore statistically decreases the life expectancy of the patients) would also assign a lower value to their life, as would anyone who enjoys hobbies such as bungee-jumping and parachuting. But if someone would not be prepared to have their life shortened in exchange for curing a disability that doesn’t mean that there is no value in trying to cure the disability.

I think that the greatest problem in this area is that of making excessive attempts to reach some absolute standard of fairness. No matter what you do someone will end up not having the budget for their health care and they WILL consider it to be unfair. If the amount of money to be spent was strictly based on age then it would be a simpler system to operate which if nothing else would save on administrative expenses and therefore allow more money to be used on providing health care.

I believe that the health care problem is the biggest economic problem that first-world countries face (little things like a mortgage crisis are temporary while health care that is provided now will affect tax revenues in 40 years time). Even if you regard people as being merely assets which are owned by the government then you would have to consider such valuable assets to be worth protecting – particularly children as you never know which ones are valuable until about the age of 21!

I find that in such discussions it’s not uncommon for the more right-wing Americans to advocate allowing people to die if they haven’t taken out appropriate insurance – it’s supposedly their fault. There are two major problems with this, one is that children who are unfortunate enough to have parents who are too poor or unwise to get appropriate insurance will lose. Another is that most people have no ability to understand probability (everyone who has purchased a lottery ticket has demonstrated their inability to make good decisions on such matters). It seems to me that some minimal level of health insurance for everyone along with comprehensive health insurance for children aimed at preventing problems should be provided by the government from tax revenue, the moral and economical justifications for this are both independently compelling.

For the more selfish readers, even if you don’t care about other people becoming sick or dying and you don’t believe that economic benefits will help you there is still the issue of disease transmission. Every time you are in a city area and find yourself downwind of a beggar you have to hope that either they don’t sneeze or that decent health-care is available to everyone. Extremely drug resistant Tuberculosis sounds nasty…

24 comments to Rationing of Health Care

  • It’s also worth saying that although the US spends the most per capita on healthcare their life expectancy ranks slightly behind Jordan, Bosnia+Herzegovina and Bermuda and well behind Australia, NZ, the UK and the average for the EU. :-(

  • Just to let you know if you’re interested CNBC’s Original “Meeting of the Minds: The Future of Health Care,” will premiere on Monday, July 27th at 9pm ET. CNBC’s Maria Bartiromo brings together some of the biggest names in the industry and government to advance the conversation and propose solutions to America’s health care crisis. For more information on this special please check out:
    Thank you!

  • Sveinung

    A man has enough money for a treatment that will save his life. The government takes those money as tax since they need to raise taxes to pay for government health care. They don’t cover his treatment do to rationing. Since he no longer can afford the treatment and those that took his money at gun point won’t sponsor it he dies. Do you consider this moral?

  • Anonymous

    I think you’ve missed a key point in your discussions of “rationing”. You suggested that the case of a private insurance company screwing a policy holder seemed worse than the case of a government screwing a person deemed less worthy of care. However, in the former case, said screwing happens by one particular insurance company with whom the policy holder voluntarily entered into an agreement; the policy holder has the choice of who to do business with, and they can choose a different provider. The truly horrific case occurs when your one and only forced provider of insurance tells you that they won’t help you, and you have no recourse.

    Related to that, if you still *do* have a choice of providers, you end up in a situation where you have to pay *two* providers: one which actually gives you some value for your money, and another which leeches away your money while refusing to treat you.

    Finally, I’d like to dispute your initial premise: what makes you so certain that we don’t have enough health care to go around? Let’s take the idealist’s position for a moment by ignoring monetary concerns: why do hospitals *ever* have empty rooms, when so many people need care? What if all the necessary health care exists to address all the health problems that we have the technology to solve, and that care simply doesn’t quite manage to get to the right place? Why do you assume we need any rationing at all?

  • Adrian Bunk

    “Rationing of Health Care” is an interesting topic, but bringing it up in the context of the US Health Care debate is just FUD.

    Why do I call it FUD?

    Each European country has it’s own Health Care system, each with it’s own advantages and disadvantages. But according to the OECD, the per capita public and private health expenditure in the USA is by far the biggest in the world, and countries like Germany or England offer decent universal health care for less than half the per capita cost.

    Even the current share of 45% public health expenditure in the USA implies that the US government is already spending more per capita than the English government that finances universal health care for everyone.

    Therefore bringing the topic of “Rationing of Health Care” into the current US Health Care debate is just FUD to move the focus away from the interesting question:

    Why is the US health care system both twice as expensive *and* worse than several European Health Care systems?

    Even the corner case of an expensive while only slightly effective treatment in England could easily be financed if the English government would spend the more than double per capita amount that’s already being spent in the USA inside the English Health Care system…

  • etbe

    Chris: Good point, I believe that’s partly due to the private health insurance companies in the US providing such awful service while making huge profits. But I think that a large part of the problem is the legal environment in the US which results in some significant amounts of money being sucked out of primary health-care and into the legal system.

    CNBC: That comment is a bit spammy, I’ll let it pass this time but I (and probably others) will start rejecting such comments if you don’t do better in future.

    Sveinung: I really doubt that a 1% medicare tax will prevent anyone from being able to afford health-care. Besides in Australia 1% of the median annual income is about equal to the cost of a single basic uninsured hospital visit (one where they do a few tests, declare you to be OK, and discharge you).

    Anonymous: Can you cite a system where an individual gets a free choice of primary health-care insurance providers? The US is absolutely not an example of this, most people there have health insurance provided by their employer and changing jobs to change insurance generally isn’t viable.

    I suggest that a private company “screwing” customers to make profits is worse than the government allocating resources to give the greatest good for the greatest number.

    Finally you need to study some queuing theory, then you will understand why having some spare capacity is essential to providing a timely service. Also you should note that most hospitals don’t have enough spare capacity for this purpose.

    Adrian: Good point, I agree that the US health-care service is totally Borked. I believe that having effective control over it with the aim of making people healthy (as opposed to the aim of making executives and share-holders rich) is the first step in the right direction.

    While Germany, England, and Australia offer decent health care there is obviously scope to improve it. The amount of money that could be spent on health care is virtually unlimited.

    I agree that having a system like Medicare with the budget that is associated with health care in the US would be a good thing.

  • I think Sveinung point is wrong, but not for the reason stated.

    I recently had cause to work out the median contribution each UK tax payer makes for their health care, and pointed out in the debate that one of the reasons many UK people don’t buy health care is that they already pay quite heavily for the state health care.

    His question is “is it moral”, but the tax pot in the UK is the tax pot. I’d argue all tax is theft (money demanded with menaces). But if you accept in some cases it is acceptable to tax (and I do), then that this gentleman paid his taxes is moral. That he then lacked money to do something doesn’t make the tax take more or less moral, as it is a sunk cost.

    So the question is then should he be treated, and the answer “no it is too expensive” is a valid response in some situations.

    It is perhaps easier to think of the state funding schemes that the total health budget is fixed. So every $45,000 we spend on getting 6 months on the life of people with rare liver cancers, we can’t spend on saving people with cheaper to treat complaints. In this case it isn’t that the director gets a new Mercedes, but that some other sick person doesn’t get his or her treatment.

    Russell is right there won’t be a perfect moral answer. Should we spend less on people whose liver cancer was caused by smoking, drinking or unprotected sex?

    The QALY is a utilitarian answer, and you effectively aim to maximise the amount of quality life retained for a given level of tax. Some of the outcomes of such a utilitarian approach cut across our moral sensibilities, as it may mean buying expensive drug to treat 60 year old people with dreadful lifestyle choices, whilst not paying for hip replacements in clean living octogenarians.

    However in the absence of a clearly better system, I’ll happily go with a utilitarian QALY based system. The problem in the UK with the interference in NICE’s work, is no one strongly represents those whose opportunity for treatment is lost (opportunity cost) because some rationing decision is over turned, even though numerically they will usually be far greater in number if NICE is working correctly (it doesn’t always – Google for NICE and acupuncture) to maximize those QALYs.

  • etbe

    Simon: You are not compelled to pay tax, all you have to do is to migrate to one of the many countries that have no functional tax system. That means most of Africa. Of course if you would rather live in a country with a functional justice system, police and border guards who don’t “tax” you, no civil strife, and an army that can defend against any invasion then you will end up paying quite a bit of tax. Another option is the UAE which has no income tax, but they have a legal form of slavery and have no bankruptcy laws so you have to make sure that you don’t get into any financial problems.

    Funding quackery such as acupuncture is a bad thing, but it’s probably cheaper than getting psychologists to help such people address the real causes of their back problems.

    If we are going to get into lifestyle choices then we have to decide who are more worthy of treatment, people who go out and do fun/dangerous things (riding motorbikes, bungee jumping, etc) or people who have boring/safe lifestyles (driving a Volvo and working for a bank). I think that you could make an equally strong case in favor of either option.

  • “You are not compelled to pay tax..”

    I suspect in most of those parts of Africa someone else can be relied upon to lean on you for a contribution to their “cause”. Death and taxes…..

    But I don’t have a problem with believing tax is theft, and paying taxes is ethical.

    I agree on the lifestyle choice conundrum, which is why I think that maximising QALYs is a reasonable goal.

    Although even then it has issues, in part you optimise for what you measure, but also the NHS has long realised that stopping people smoking is the most “effective way” of spending their money if you use simplistic models. This doesn’t allow for the fact that the government can discourage smoking and raise revenue by increasing duty on tobacco, which sounds a lot better to non-smokers than the current trialled scheme to pay people from the NHS budget to give up smoking.

  • etbe

    Simon: True, there are “war taxes”. But if you have a big enough gang you don’t pay such taxes – you can tax others! Or you could move to a particularly undesirable area where the land is not good enough to support modern farming. I believe that there are still some areas where stone-age lifestyle is a viable option in that no-one who wants to steal the land has modern weapons. In that case a dozen guys with stone axes could escape from taxation. It wouldn’t be a luxurious lifestyle.

    In regard to the “tax is theft” idea, we can consider tax as being the payment for certain essential services (primarily security and a justice system). While there is no way of entirely escaping it in a place that offers a decent standard of living you do get a choice of places to live with varying tax rates. Claiming that “tax is theft” seems to be like claiming that “payment for food is theft”, as food is something else that is essential, which costs money, and which can be bought at different places for different prices.

    Good point about smoking.

    The above article about “Blue Dog” Democrats and health-care reform in the US is interesting.

  • etbe

    Here’s an interesting blog post explaining how health-care costs reduce entrepreneurship in the US.

  • m&m

    a concern of everyone that never gets addressed. I have medicare, everytime I go to dr for treatment my card is accepted sweetly and then I am clobbered weeks later with the difference in what medicare pays and what the dr thinks he is worth. How will this change with managed care? What’s to stop the dr from accepting the amount that the national health plan will pay and then still send a big bill weeks later. The same query for hospitals.

  • etbe

    m: When I go to the doctor in Australia the bill is usually $10 or $15 greater than what medicate pays. That can be done by getting the money back from medicate or by just paying the difference. So at some places you just visit the doctor and then give them $10 cash and sign a medicare form. It’s cheap and it’s easy! The rates are printed on the wall so everyone knows what it will cost before seeing the doctor.

    Driving to the doctor will cost me about $4 in petrol. Catching public transport costs about the same. The amount of income that I miss due to the time spent in visiting the doctor (which will be well over an hour including travel) is much greater than the medicare expense.

    An Australian who works on the minimum wage and takes an hour off work to visit the doctor will probably lose more money from the time off work and the travel expenses than they do from paying the money that medicare doesn’t cover.

  • Adrian Bunk


    When I went to a doctor in Germany, I got all treatment I needed without having the slightest clue what it costs at all. It’s fixed for all treatments how much a doctor can charge for it, and the public health care providers will pay this amount directly to the doctor. Doctors are not allowed to charge more.

    And if you think that’s too much regulation: This applies when doctors treat people with a public health care provider (the vast majority of the population). It is mandatory to have health care, but under some circumstances you are allowed to go to private health care providers instead, and they have different agreements with doctors.

    Same goes for hospitals.

    Your Medicare could set up similar rules for doctors if they are treating patients with Medicare.

  • etbe

    Paul Krugman has an interesting article about the various ways that the US health-care system could be reformed. He suggests that the current plan is most like what is done in Switzerland.

    He also has an interesting article about the protests at town-hall meetings.

    And another interesting article about the so-called centrist Republicans on health-care.

    David Leonhardt has written an interesting article about obesity and health-care costs. Some reasonable measures to combat obesity (such as high taxes on bad things such as fructose-enhanced corn syrup) would do a lot of good at reducing health-care costs.

  • etbe

    The Making Light blog has an interesting post on this topic by Abi Sutherland, here is a quote: “Americans seem whipsawed by a combination of two things: very poor employment protection (“at will” employment in particular) and the way that health insurance is tied to employment. The government may not be able to restrict your freedom of speech or your pursuit of happiness, but your employer certainly can.”

    The comments section is also good (as is usually the case for that blog), here is a summary:

    Phiala points out that decisions on whether to get married or divorced are forced by health insurance policies.

    J. Random Scribbler remarks that “It boggles my mind that people put up with treatment from their employers that would make them scream and run for the nearest gun shop if the government did the same thing”.

    Bruce Cohen suggested “that corporations should be given the legal status of domestic animals, which must be licensed and controlled, and whose officers are the persons legally responsible for harm caused by the corporation”.

    John A Arkansawyer says “The free market answers one question, ‘What is the worth of a human life?’ with another question: ‘How much am I bid?’ ”

    Matthew Brown says “Another point I’ve pondered before is how much of the litigous culture that many conservatives decry, with some rightness, is encouraged by our lack of healthcare and safety net? Certainly people are often forced to play the lawsuit lottery because the alternative is financial ruin”.

  • Sveinung

    About the comment above: There is a huge difference between your employer and your government. The definition of government is the entity that has a monopoly on legal violence in an area. The definition of employer is a customer that buys your work. You take a job for your employer voluntarily. Your government is violently forced on you. If you don’t like what your employer does to you you can peacefully fire him by quitting your job. If you don’t like what your government does to you you can’t fire it peacefully. Therefore it’s sometimes legitimate to use guns against your government while it’s not legitimate to use guns against your employer. If your employer start to act as violently as a government he stops being an employer and starts to be a criminal or a (part of) government. If he for example use physical violence against you to force you to work for him even if you don’t have a contract with him that say you should work it’s OK to defend yourself against him.

  • Adrian Bunk


    Your “You take a job for your employer voluntarily. … If you don’t like what your employer does to you you can peacefully fire him by quitting your job.” works only for the minority of people that are healthy and highly qualified.

    You somehow have to earn your living, and that forces you to take some job – even if all jobs that are offered to you are terrible.

    Please read in a history book about 19th century capitalism in Europe, and you will see see how your naïve theories about employment have been disproven in practice.

  • Sveinung

    @Adrian: It’s not the employer that forces you to take a job. You can’t justify using violence against him by saying that something else forces you.

  • Adrian Bunk


    The only one of us who justified using guns against an employer was actually you with “it’s OK to defend yourself against him”.

    But you are missing the real issue:

    You are not getting a peaceful and stable democracy through abstract discussions of government and employer. You miss all the current and past experiences in the wide area between no regulation at all and no companies at all. The best known way seems to be somewhere in the middle, and the balancing of the middle is an everlasting process.

  • Adrian Bunk

    Coming back to the topic, an interesting article about the current US discussion and different European healthcare systems:

  • etbe

    Gary Murphy wrote a good letter to his representatives taking them to task for their handling of the health-care debate.

    Others in the US might consider writing a similar letter.

  • etbe

    Charles Stross wrote about health-care and the Libyan who was convicted of the Lockerbie bombing and a general trend towards a lack of mercy in the US. Lots of interesting comments there.

    # In a new study of terminally ill cancer patients, researchers at Dana-Farber
    # Cancer Institute found that those who draw on religion to cope with their
    # illness are more likely to receive intensive, life-prolonging medical care
    # as death approaches –– treatment that often entails a lower quality of life
    # in patients’ final days.

    A Huffington Post article about this issue has some interesting insights.

    Both those links are from comments on the above Making Light post.  There are
    some other interesting comments such as the following from Craig R:

    # I think the difference in how different people (sometimes even in the same
    # congregation) face the prospect of death may be more a matter of how they
    # view what is the guide that has them hold to a “fill-in-the-sect guideline”:
    # Is it that they follow the precept and live that life because It Is The
    # Right Thing To Do or they live that life because If They Don’t They Will Pay
    # For It Later.
    # One of the curiosities, from my seat, firmly in the mainstream Christian
    # section, is that those who fear what will happen sometimes feel more free to
    # be sh*ts because they feel they can also count on playing the
    # He/She/Whatever Will Forgive card, whereas the Do The Right Thing people may
    # be more apt to think — “this is not a Right Thing, I should Not Do This.”
    # Taking the responsibility of being correct on themselves.

    The following is from Lee:
    # Craig, #94: What you’re describing is the difference between internal and
    # external morality, and something I’ve been aware of for a very long time. I
    # think this also ties into the notion expressed in #92, that the deathers are
    # afraid their children will murder them if given the opportunity. When all
    # you have is external morality, that fear makes much more sense, because it’s
    # hard to conceive of someone else having internal morality.

    Here’s a good comment from Ursula L:
    # Of course, if you want to cut costs, the most humane way would be to cut all
    # the costs that come with supporting dozens of different insurance companies
    # and hundreds or thousands of different plans. The multiple billing systems,
    # the complications of doctor’s offices ensuring that the right form is filled
    # out for each patient and sent to the appropriate company, the duplication of
    # bureaucracy in each different company, the diversion of “health care” funds
    # to things like profit margins, advertising, and dividends.
    # And it’s gotten to the point where it is easier to imagine solutions that
    # let people die then to imagine solutions that kill off corporations.

  • etbe

    Above is a nice Youtube video explaining the health-care issues.

    The above blog is the source of that video.