by Robert Maynard
It looks like the rationing of health care by a select commission is almost here. On April 19th the Vermont Digger posted an article entitled “Hospital budget caps set by Green Mountain Care Board“, which basically informs us of the following:
Vermont health care authorities issued instructions to the state’s 14 hospitals Wednesday to keep the increases in their 2013 budgets to 3.75 percent, an even tighter lid than the last two fiscal years whose Legislature-imposed limits were 4.5 and then 4.0 percent.
The cap was set by the Green Mountain Care Board, which under state law has the authority to establish hospital budgets. The action is a significant cost constraint for the whole health care system since the state’s hospitals and the doctors whom they employ deliver more than 60 percent of the care in the state.
Attempting to control health care costs by empowering a commission of bureaucrats to set a “global budget” for health care spending is precisely the approach that has led to rationing in other countries. The documentary “Sick and Sicker: When the Government Becomes Your Doctor” illustrates the consequences of this approach in Canada. The subject of how such approaches end up resulting in the rationing of care was touched on in a November 2009 Wall Street Journal article entitled “The Rationing Commission”, which discussed concerns with ObamaCare:
Like most of Europe, the various health bills stipulate that Congress will arbitrarily decide how much to spend on health care for seniors every year—and then invest an unelected board with extraordinary powers to dictate what is covered and how it will be paid for. White House budget director Peter Orszag calls this Medicare commission “critical to our fiscal future” and “one of the most potent reforms.”
On that last score, he’s right. Prominent health economist Alain Enthoven has likened a global budget to “bombing from 35,000 feet, where you don’t see the faces of the people you kill.”
The Cato Institute published a study about the performance of health care systems across the globe entitled “The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World” and discovered numerous problems with nationalized health care. One particular problem was the use of global budgets to control health care cost. As a specific example, here is what they had to say about France’s approach to controlling costs: “Of more immediate concern, global budgets and fee restrictions for hospitals have led to a recurring lack of capital investment, resulting in a shortage of medical technology and lack of access to the most advanced care. For example, the United States has eight times as many MRI units per million people and four times as many CT scanners as France.”
The medical technology gap is problem for just about all countries who have pursued the path of controlling costs via global budgets. Of course regulations on the testing and use of new drugs and equipment play a significant role as well. There is an inherent problem in an approach that sells the notion to the public that health care is a human right that must be guaranteed by government, while at the same time tries to control costs by having a distant bureaucracy put arbitrary caps on medical spending that have no relation to demands. When people get the idea that medical care is free, that greatly increases the demand and thus the costs. The effect being created by the supporters of government controlled health care is to drive up demand and then issue restrictions on how much can be spent by medical professionals and on what. The end result inevitably is the rationing of care and the lowering of its quality. Furthermore, the global budgeting approach has not been able to keep costs down over the long run after the demand has been artificially driven up. As the Cato Institute report cited above indicates, many countries that have went down the path of nationalized health care, are now instituting free market oriented reforms.
The good news for Vermonters is that we do not have to go down that path to control costs and increase the quality of our health care services. In April 2006 the Ethan Allen Institute published a report entitled “The Promise of Consumer-Driven Health Care.” The subtitle of the report was “How Putting Consumers in Charge of their Health Will Improve Wellness – and Reduce Excessive Costs.” The bad news is that “we can’t get there from here.” In order to enact true patient choice, or a”consumer-driven” approach to health care, we would first need a competitive health insurance market. Unfortunately, previous reforms like community rating and guaranteed issue have wrecked the private health insurance market in Vermont. The damage done by those so-called reforms, and others, would first have to be undone before a truly patient centered approach to reform would have a chance. Perhaps we may some day get there if the people of Vermont would insist that our political leadership stop heading down a dead end and reverse course to a direction that actually may end up increasing the quality of care and keeping costs down at the same time.