Rationing in health care: The Utility of Ignorance?

Rationing in health care

With indebtedness and gratitude to

Joanna Coast, Department of Social

Medicine, University of Bristol, for writing a book, PhD thesis and presentation on prioritysetting…… and for allowing me to plagiarise it all!!!!

M207: Health Economics

Rationing in health care

• What does ‘rationing’ mean?

• Rationing with respect to efficiency or equity?

• Implicit versus explicit rationing

• Methods and examples of explicit rationing


Rationing: what’s in a name?

• Economics concerned with choice between competing alternatives

• Based on axiom of scarcity - resources limited relative to wants

• Fundamental ‘economic problem’ is therefore allocation of these scarce resources

• ‘Rationing’ (and priority-setting) just another term for resource allocation


Rationing: what’s in a name?

“The word [rationing] is invoked to make the flesh creep, not to prompt argument about how to deal with the inescapable”

Rudolph Klein, 1992


Means of rationing

• Market system - price mechanism establishes equilibrium (efficient allocation)

• Non-market system - absence of price as allocative tool leads to other, non-price, techniques

• Issue is one of: (i) philosophical basis for rationing; and (ii) applied technique for rationing


‘Philosophical’ basis of rationing

Price system - objective = efficiency consumer sovereignty allocation by WTP/ATP

Non-price objective efficiency or equity’?

who decides on allocation?

allocation by what criteria?


Objective: efficiency or equity?

• Efficiency

– maximisation of ‘benefit’

– utilitarian ethic

– distribution is irrelevant

• Equity

– just distribution

– based on need? age? lottery?


Objective: efficiency or equity?

• Philosophical basis price system/efficiency is utilitarianism

• Other philosophical bases are generally pursued in non-price allocation

• Which do we adopt?


Three important ethical theories

• Utilitarian - greatest good for greatest number (maximise ‘utility’ or ‘happiness’)

• Deontological - cannot ignore duty to one individual for sake of good of others

• Rawlsian ‘maxi-min’ criteria for seeking to secure good of the least fortunate in society


Ethics and ‘levels’ of rationing

• Theories have varying degrees of applicability at population and individual level

• Utilitarian and Rawlsian generally

‘population’ level, Deontological generally individual

• May adopt different ethical principle at each level of rationing (decision-making)


Who pays?

• Health Authority?

• Government?

• Taxpayer?


Who really pays?

• Opportunity cost if we choose to do one thing, the cost of doing that is the value which would have been obtained from the best alternative choice

• Who pays - the person who does not receive treatment


Implicit or explicit rationing?

• Implicit rationing: care is limited, but neither the decisions, nor the bases for those decisions are clearly expressed.

• Explicit rationing: care is limited and the decisions are clear, as is the

reasoning behind those decisions.


Rationing in the UK

“Rationing in Great Britain has been implicit…It is a silent conspiracy between a dense, obscurating bureaucracy, intentionally avoiding written policy for macroallocation

(rationing), and a publicly unaccountable medical profession privately managing microallocation so as to conceal life and death decisions from patients”

(Crawshaw, 1990)


Rationing in the NHS

• Predominately implicit rationing

• BUT increasing advocation of explicit rationing

– 1989/91 reforms

– 1994-5 Health Committee Report

– 1996 Rationing Agenda Group

– NICE?


Methods of explicit rationing

Explicit rationing

Political processes

Technical methods

Lay participation

Medical paternalism

Equity Efficiency

(

Coast et al, Priority setting: the health care debate, John Wiley, 1996)


Explicit rationing: technical methods

• Single principle

• Little distinction between setting priorities at different levels

• Examples

– maximising health gain

– need-based rationing

– lotteries

– age-based rationing


Technical method 1: ‘league tables’

• Economic evaluation produces information on cost-effectiveness

• If using comparable outcomes (eg

QALY) can ‘rank’ according to c/e

• Can use resultant ‘league table’ to allocate resource to most c/e first


League tables: handle with care!

• Studies show differences in methodology

– choice of discount rate

– method of estimating utility values

– range of costs included

– choice of comparator

• Requires consistent methodology,

‘admission criteria’ for inclusion, applicability in local decision context


The Oregon Plan

• 1987 - decision to stop funding for organ transplantation

• 1989 - Oregon Health

Services Commission begins work

• 1990 - List 1

• 1991 - List 2

• 1994 - plan begins


Oregon List Version 1

• Efficiency principle

• 1600 condition/treatment pairs

• Cost/QALY gained

– social values

– outcome

– cost



“... looked at the first two pages of that list and threw it in the trash can”

“... the presence of numerous flaws, aberrations and errors”

(Harvey Klevit, member, Oregon Health Services Commission)



• Equal treatment for equal need

• 709 condition/treatment pairs

• Method:

– Development & ranking of categories

– Ranking C/T pairs within categories

• Public preferences

• Outcome

– Professional judgement



Top Five C/T pairs

1 Pneumonia - medical

2 Tuberculosis - medical

3 Peritonitis medical/surgical

4 Foreign body - removal

5 Appendicitis - surgical

Bottom Five C/T pairs

705 Aplastic anaemia - medical

706 Prolapsed urethral mucosa surgical

707 Central retinal artery occlusion

- paracentesis of aqueous

708 Extremely low birth weight, <

23 weeks - life support

709 Anencephaly - life support


Technical method 2: PBMA

1 Split health care service into ‘programs’ and subprograms - homogenous output

2 Estimate current spending and outputs

(benefits?) achieved by each programme

3 Identify ‘marginal programs’ which would be the first to be cut or expanded as budget changes


Technical method 2: PBMA

4 Identify change in output as result of adding/subtracting budget (eg

£100,000)

5 Decision based on (re)allocation which yields greatest overall benefit


PBMA: panacea or poison?

+ combines pluralistic bargaining & technical exercise

+ applies ‘correct’ concept within data limitations

- problems with data - quality, absence, robustness

- subjectivity (bargaining) - who decides?

- what is the maximand - output=???


Explicit rationing: political processes

• Processes and structures

• Debate and bargaining

• “multiplicity of objectives”

• Micro versus macro level


Yes

No

Medical discussion and debate

Yes

No

Yes

• Current form of decision making

• Variable: therapies funded in some localities but not all

• Different weight to different principles?


Public participation?

• Who should be involved?

• What methods should be used to obtain representative views? silent voices?

• How should information be presented?

• How should public views be used?

• What weight should public views be given?


New Zealand’s Core Services

• 1991 - Consultation Document

• 1992 - National Advisory Committee on

Core Health and Disability Support

Services

• 1992-3 - Public meetings about broad priority areas

• 1993 - Consultation over broad ethical framework

• 1994 - Panel discussions to formulate guidelines incorporating social factors


Success of Core Services

• Incrementalism

– but how much has actually changed?

• Public consultation

– emphasis on hearing many voices

– have public ACTUALLY influenced priorities?

– how have methodological problems been dealt with?

– concern with “overconsultation”


Advantages and disadvantages

Technical

+ implied neutrality

+ clarity of objectives

– data hungry

– inherent value judgements

– weaknesses in methods

– rigidity

– implementation problems


Bargaining

+ suited to uncertain and complex situations

+ decisions based upon compromise

– heavily dependent on which groups are included

– slipping back to implicit rationing

Challenges to explicit rationing

• Potential impact upon the stability of the health care system

• Potential for disutility arising from explicit rationing


Potential instability (Mechanic)

• Individual strength of preference not considered

• Lack of acceptance of explicit rationing

• Challenges to health authority

• Weakening resolve of health authority

• Return to implicit rationing


Utility of implicit rationing

• Deprivation disutility • Denial disutility

- patients who are aware that care is being rationed may suffer a sense of grievance if they are not treated

- citizens may suffer disutility from being asked to partake in the process of denying care to other members of society


"it is easier to bear inevitable disease or death than to learn that remedy is possible but one's personal resources, private insurance coverage or public programme will not support it"

(Evans & Wolfson, in Mooney, 1994)


“for physicians to have to face these trade-offs explicitly is to assign to them an unreasonable and undesirable burden”

(Fuchs, 1984)


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