By Burke Balch, JD, and Jennifer Popik, JD
Robert Powell Center for Medical Ethics
The federal health care law enacted in 2010 (popularly known as ObamaCare) imposes unprecedented limits on what Americans are allowed to spend to save their lives and the lives of their family members. Now, Maryland officials have unveiled a proposal that would impose even lower limits in that state.
In 2018 and later, the federal law would limit Americans to health care spending that rises only at the increase in per capita Gross Domestic Product plus 1%. The Maryland proposal would limit Marylanders to health care spending that rises only at the rate of per capita State Domestic Product.
While it might seem reasonable to some that the resources devoted to saving lives grow only at the rate of the general economy, in fact productivity increases in other areas of the economy have consistently freed up resources that can be used to reduce the death rate and increase health.
A government-imposed straightjacket forcing any one sector of the economy to grow no more than the average rate of economic growth is as foolish as would be a rule allowing no student to receive a grade higher (or lower) than the average grade in the class. In a free market economy, the share of resources devoted to each sector constantly shifts based both on increases in the efficiency of production and on changes in demand for products and services.
Imagine the impact on our overall well-being if, in 1960, a law had been enacted preventing spending on computers from rising any more than the average growth in the economy. Personal computers –desktop or laptop—probably could never have been developed. And we certainly would not have smartphones. The Internet could never have been developed with such a limitation.
The consequence would have been clear. Without the dramatic developments in computer technology over the past half-century, our standard of living, and overall economy, would have been far lower than it is today – frozen at a level not much different from that available in the 1960s.
Americans have to date enjoyed dramatic drops in mortality from cancer, heart disease, and a host of other illnesses and injuries precisely because our increasingly productive economy has allowed us to devote more resources to saving our lives. Now, however, the government is slamming on the brakes, with the consequence that medical progress will – at best – slow to a crawl
The Maryland plan, which would take effect January 1, 2014, aggressively takes aim at what its citizens are permitted to spend to obtain medical treatment in hospitals. In practice, forbidding prices from growing faster than the overall economy will mean a reduction of about half in in the annual increase in what Marylanders would otherwise be likely to spend in hospitals.
When the state, as Maryland is proposing to do, limits by law what can be charged for hospital prices, it limits what people are allowed to pay for medical treatment at those hospitals. While everyone would prefer to pay less – or nothing – for health care (as for anything else), government price controls in fact prevent access to lifesaving medical treatment that costs more to supply than the price set by the government.
Under a scheme of hospital price controls, hospitals will be forced to reduce lifesaving medical treatment as they are squeezed more and more tightly each year by the declining “real” (that is, adjusted for health care inflation) value of the payments they take in. These day-to-day rationing decisions will have the most direct and visible impact on the lives – and deaths – of people with a poor “quality of life.”
If the plan is adopted, Maryland will be the second state, after Massachusetts, to establish a framework to keep health care spending rising no faster than the growth of the state economy. The difference is Maryland’s proposal sets rates much lower.
In order for Maryland lawmakers to enact this kind of price cap, it would require a waiver from the Obama administration’s Department of Health and Human Services. The Obama administration would almost certainly grant such a waiver, since a similar method is part of the Obama Health Care Law.
The similar measure in the Obama Health Care Law is an 18-member cost cutting board known as the Independent Payment Advisory Board or IPAB. In addition to having authority to limit Medicare reimbursement rates, IPAB also has a key role in suppressing nongovernmental health care spending.
IPAB is instructed by the health care law to make recommendations to limit what all Americans are legally allowed to spend for their health care so as to hold it below the rate of medical inflation through 2017, and thereafter to the per-person growth in the Gross Domestic Product plus one percent.
The health care law authorizes the Department of Health and Human Services (HHS) to implement these recommendations by imposing so-called “quality” and “efficiency” measures on health care providers, limiting what treatment doctors are allowed to give their patients.
The documentation can be found here: Life at Risk: Routes to Rationing.
What happens to doctors who violate a “quality” standard by prescribing more lifesaving medical treatment than it permits? They will be disqualified from contracting with any of the health insurance plans that individual Americans, under Obamacare, will be mandated to purchase. Few doctors would be able to remain in practice if subjected to that penalty.
This means that treatment a doctor and patient deem advisable to save that patient’s life or preserve or improve the patient’s health — but which exceeds the standard imposed by the government — will be denied even if the patient is willing and able to pay for it.
Though we will all be subject to IPAB cuts, the situation in Maryland could be even more dire. If the Maryland proposal is enacted it will mean even more severe limits on health care services for Maryland citizens.