Will States be bribed to intensify Health Care Rationing?


By Jennifer Popik, JD, Robert Powell Center for Medical Ethics

CntrforAmProgressShould the federal government pay states to limit what their residents are allowed to spend to save their lives? Late last week, the Center for American Progress, a D.C.-based think tank led by former staffers for the Obama and Clinton Administrations, released a new proposal that would incentivize states to ratchet down health care spending.

According to a September 4, 2014 Associated Press article by Ricardo Alonso-Zaldivar, entitled “Democrats borrow a GOP idea on health”

“Individual states would set their own targets to curb the growth of health care spending. If they succeed, they’d pocket a share of federal Medicare and Medicaid savings, ranging from tens of millions to $1 billion or more, depending on the state….

“The state spending targets would encompass private spending, as well as Medicare, Medicaid, state and local employee insurance plans, and subsidized private coverage under the new health law. States would not have to expand Medicaid under Obama’s health care overhaul to participate.”

Under the current Obama Health Care law, there are already multiple mechanisms to limit what Americans may choose to spend, out of their own funds, for their own families’ life-saving and health-preserving health care. (For details and documentation, see www.nrlc.org/uploads/communications/healthcarereport2014.pdf ) If the Center for American Progress (CAP) proposal is adopted, states will be pushed to impose even more severe limits in order to receive highly coveted bonus payments.

While healthcare spending growth has been lower over the past several years due to a slow economy, it is predicted to return to higher levels in the future. The CAP report, “Accountable Care States: The Future of Health Care Cost Control,” laments, “Without action, health care spending will continue to crowd out other vital spending in household and government budgets.”

This is the same fatally flawed reasoning at the heart of the Obama health care law. (See www.nrlc.org/uploads/medethics/AmericaCanAfford.pdf for a rebuttal of the assumption that America must curtail growth in health care spending.)

Under the Obama Health Care law, in 2018 and later, the government would limit Americans to health care spending that rises only at the increase in per capita Gross Domestic Product plus 1%.

What does forbidding health care spending from growing faster than the overall economy mean in practice? A reduction in what Americans, unconstrained by government-imposed rationing, would be able to devote to preserving the lives of their family members. 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 preserve life and increase health.

A government-imposed clamp-down forcing any one sector of the economy to grow no more than the average rate of economic growth would be like a school-imposed rule allowing no student to receive a grade higher 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. Probably personal computers – desktop or laptop—could never have been developed. The Internet could never have been developed – nor smartphones.

The consequence would have been clear. Without the dramatic developments in computer technology over the past half-century, our standard of living, and the 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 inevitably begin to slow.

The CAP proposal aggressively takes aim at what America’s citizens are permitted to spend to obtain medical treatment in hospitals. According to Alonso-Zaldivar, “An economic analysis with the proposal sees total savings of $1.7 trillion over the first 10 years if about half the states embrace the idea. Of that amount, the federal government would save $350 billion, net of payments to states.”

While everyone would prefer to pay less – or nothing – for health care (as for anything else), government prohibitions on health care spending in fact prevent access to lifesaving medical treatment that costs more to supply than the limit set by the government.

Hospitals and doctors 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.”

While the attempts to implement the ACP proposal are still in their infancy, Alonso-Zaldivar writes, “Authors plan to shop the idea around to top policymakers on Capitol Hill and in the administration. Congressional approval is needed to fully develop the concept.” The plan’s proponents hope to win Republican support because of its focus on action by states rather than the federal government, and support from both parties because of the widespread, albeit erroneous, belief that health care spending is out of control. In the absence of significant constituent protests, no one can be sure such a proposal will not become law.

While the Obama Health Care Law continues to be implemented in 2014, it is important to continue to educate friends and neighbors about the dangers the law, as well as proposals like this, pose in restricting what Americans can spend to save their own lives and the lives of their families. You can follow up-to-date reports here: powellcenterformedicalethics.blogspot.com