Question

Is it possible to provide health care without rationing? In 1948 every household in Britain received a leaflet stating that the new National Health Service would "provide you with all medical, dental and nursing care. Everyone - rich or poor, man, woman, or child - can use it or any part of it. There are no charges, except for a few special items."

a) This pioneering system of health care provision, which celebrated its 60th anniversary in 1998, was based on the assumption that the quantity of health care that would be demanded at a zero price is finite. The quantity demanded nevertheless overwhelms the quantity supplied at the zero price in Britain and all the countries that subsequently initiated similar systems and found themselves confronted by shortages of health care services. How would a shortage show itself in such a situation?

b) If health care is made available to everyone at a zero money price, and at this price the quantity demanded exceeds the quantity supplied, how will health care be rationed?

c) What system of rationing would you recommend?

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Answer 1

Firstly, let us consider whether healthcare system can be provided without rationing. The answer is:

If healthcare system is to be provided free of cost or at a nominal cost, healthcare system cannot be provided without rationing. The reason is limited resources and unlimited demands. Thus, priority setting and rationing have to be applied.

Other method might be providing health insurance for everybody below a fixed income per year (the poor, who cannot afford) for free or at a nominal cost. The people who could afford health insurance should be promoted to buy health insurance. This method ensures that only those who cannot afford healthcare are getting the benefits of free healthcare system.

a) As the demand for healthcare services grow,the supply has to increase proportionally. If that does not happen, the shortage shows itself in following ways:

1) Lack of skilled professionals like doctors and nurses. As an example, a 2016 study published in Human Resources for Health indicated a global demand for 80 million health care workers by 2030. The supply of healthcare professionals is expected to reach just 65 million, leaving a shortage of 15 million worldwide.(https://mphdegree.usc.edu/blog/a-closer-look-at-the-public-health-workforce-crisis/)

2) Lack of infrastructure for healthcare like shortage of number of hospital beds and shortage of speciality medical instruments. This leads to shortage of emergency services and leads to avoidable deaths.

b) Healthcare rationing could be practiced at 4 levels: patient, provider, manager, and policymaker .Healthcare could be rationed if following ways:

1) Patient level : The individual patient’s needs and preferences may lead to self-rationing. A sick person without a health insurance plan makes the decision to seek care by comparing the costs and benefits of receiving the care. S/he might refuse to proceed to get the services if could not afford it or see the costs more than the benefits.However, price-based self-rationing leads to underutilization of health care services. So this is not a good method.

2) Policymakers level : The politicians, as policy makers can decide on many strategies for rationing healthcare

a) Policymakers and authorities at macro- level can use methods such as budget, benefit package, and payment mechanisms to control the behavior of health care managers and providers and restrict providing a broad variety of inappropriate health services. Budget influences the behavior of providers and leads them to reallocate health care resources or even ration some health care services. However, this method can lead to covert rationing For instance, tight budgets in the UK resulted in the denial of dialysis and some forms of heart surgery to patients over the age of 55 years.  

b) Some mechanisms such as queuing, copayments, and deductibles can be used at macro-, meso- and micro- levels to limit access to health care services at individual, household, or community levels and control the demands for health care services. Queuing gives some patients a higher priority than others in accessing health care services, which may be explicit by using defined indicators of severity of the patient’s clinical condition, or may be implicit based upon doctor’s referral practices .

c) Health services coverage is sometimes limited through the specification of a menu of core health care services (minimum health care package) to be made available for the public. Accordingly, certain health care services outside of this package will be unavailable to all patients.

d) Politicians, policymakers and health insurance companies at the macro- level could set some rules and regulations about the allocated health care budget, services coverage, and cost sharing mechanisms considering political, economic, social, and technological factors.

3) provider level : The third level of the health services rationing occurs at the organizational level (e‏.g, hospital, clinic, and nursing home) that provide infrastructure and needed resources to support health care providers. Managers are responsible for allocating resources among various health care providers and may ration some health services.

c) Deciding the best rationing system

Rationing can be applied in all 4 functions of the health systems including governance, financing, resource generation, and health services provision. However, politicians and health care authorities, as the stewards of the national resources, should plan and direct rationing health care services to establish the fairest possible health system, to make the best possible use of limited resources, and to deliver the best health outcomes. The government and Ministry of Health should regulate and balance rationing at meso- and micro- levels to maximize the probability of success in health services rationing. A lack of rationing health care services policy at the political level may lead to uncontrolled medical professionals’ power of decision-making‏. This discussion makes it clear that the health care rationing should be done by politicians and policy makers.

Next, to decide the best strategy, it is necessary to see the pros and cons of each method of rationing.

Methods such as budget, benefit package, and payment mechanisms may lead to covert rationing and denial of essential services to patients, as has already been observed in UK in early 1980s (UK government changed it's policies subsequently) .So this method seems to be flawed.

Methods like queuing, copayments, and deductibles give limited benefits . This method is successful till a certain extent because higher copayments and deductibles discourage patients from using expensive health care services. However, some patients would tend to avoid expensive services even when they are required.

Specification of a menu of core health care services (minimum health care package) to be made available for the public is a method which would give good results. Only those who can afford services outside this menu, would go for those services reducing the load on those services. However, this method would not reduce the load on core healthcare services which are free. So shortage would still be encountered in core healthcare services.

Setting rules and regulations about the allocated health care budget, services coverage, and cost sharing mechanisms seems to be the best method for rationing according to the preceding analysis. This method would ensure that healthcare services are not demanded when not required (because there is a constraint on healthcare budget) and thus reduce the demand for healthcare services. However, this method should be used with discretion so that expensive but emergency medical services like cardiac care are not excluded due to budgetary concers.