American Journal of Law & Medicine

Towards a new moral paradigm in health care delivery: accounting for individuals.

ABSTRACT

For years, commentators have debated how to most appropriately allocate scarce medical resources over large populations. In this paper, I abstract the major rationing schema into three general approaches: rationing by price, quantity, and prioritization. Each has both normative appeal and considerable weakness. After exploring them, I present what some commentators have termed the "moral paradigm" as an alternative to broader philosophies designed to encapsulate the universe of options available to allocators (often termed the market, professional, and political paradigms). While not itself an abstraction of any specific viable rationing scheme, it provides a strong basis for the development of a new scheme that offers considerable moral and political appeal often absent from traditionally employed rationing schema.

As I explain, the moral paradigm, in its strong, absolute, and uncompromising version, is economically untenable. This paper articulates a modified version of the moral paradigm that is pluralist in nature rather than absolute. It appeals to the moral, emotional, and irrational sensibilities of each individual person. The moral paradigm, so articulated, can complement any health care delivery system that policy-makers adopt. It functions by granting individuals the ability to appeal to an administrative adjudicatory board designated for this purpose. The adjudicatory board would have the expertise and power to act in response to the complaints of individual aggrieved patients, including those complaints that stern from the moral, religious, ethical, emotional, irrational, or other subjective positions of the patient, and would have plenary power to affirm the denial of access to medical care or to mandate the provision of such care. The board must be designed to facilitate its intended function while creating structural limitations on abuse of power and other excess. I make some specific suggestions on matters of structure and function in the hope of demonstrating both that this adjudicatory model can function and that it can do so immediately, regardless of the underlying health care delivery system or its theoretical underpinnings.

I. INTRODUCTION

Health care is not cheap. Far from it; in 2009, health care spending in the United States consumed a projected $2.5 trillion or 17.3% of the gross domestic product (GDP). (1) In the same year, the average American spent $923 in "out of pocket" health care expenses? While the cost of America's consumption is high relative to the rest of the world, the excessive and growing cost of health care is a global problem. In 2006, total health care spending amounted to 15.8% of the GDP of the United States, 10.0% of the Canadian GDP, 11.0% of the French GDP, and 8.1% of the Japanese GDP. (3) Those numbers have been steadily climbing. In 1980, the respective percentages of GDP were 8.7%, 7.0%, 7.0%, and 6.5%. (4) Recent estimates suggest that total health care spending in the United States will reach a staggering 19.3% of GDP, or nearly $4.5 trillion, by 2019. (5) The same estimates suggest that 2019 per capita expenses will reach $13,387 and out of pocket consumer expenses will reach $1390 (a 50% increase from 2009 out of pocket levels). (6) Many commentators have declared that if limits are not placed on access to health care (limiting access being the preferred or most direct means of limiting consumption), health care expenditures can easily reach 100% of GDP in industrialized nations, even without accounting for wasteful expenditures. (7)

Just as medical resources are costly, so are they scarce. This relationship between cost and scarcity is not merely coincidental; they each cause the other. As scarcity increases without a corresponding reduction in demand, rudimentary price theory dictates that price will increase. Multiplied over a population, these conditions result in decreased access to care and ultimately the death or suffering of individuals who are denied access. These social repercussions threaten to further commodify access to health care, placing increasing upward pressures on demand, thus further increasing price and decreasing access. We find ourselves caught in a violent spiral of price escalation and adverse health consequences.

In light of these trends, many who have commented on the subject of rising health care prices recommend the imposition of limits on health care consumption; in other words: rationing. Needless to say, health care rationing makes many people uncomfortable. Consider an article in the American Spectator that referred to rationing plans as "health care fascism." It recommended a "national, populist, grassroots movement" to fight centralized rationing and offered its readers the following stark warning: "Unless this is stopped, many of you reading this article right now will one day suffer death-by-liberalism, when the government bureaucracy decides that the health care you need is not worth the cost, or puts you in a waiting line where death will arrive before

treatment." (8)

The American Spectator's populist movement was clearly mobile by the summer of 2009. During the summer congressional recess, many members of congress went home to convene "town hall meetings" to discuss health care reform with their constituents. I decided to attend one such meeting hosted by Senator Ben Cardin, junior senator from Maryland, on August 10, 2009. I left the meeting inspired, although not by Senator Cardin's words, as it was impossible to hear them from the other side of the brick and stone auditorium in which Cardin was speaking. The meeting started at 7PM but, according to a security officer present outside the meeting, capacity had been reached by about 5PM. Those who came thereafter were not permitted inside. When I arrived at about 6:30PM, naively expecting to be seated, I was overwhelmed by the energy of the people standing outside inspired to participate in the process of lawmaking. By my estimation, there were 1000 people convened outside under the hot Baltimore sun. About 40% of them were carrying placards, sporting a bull horn, or had adopted some other means of clearly making their views known. The atmosphere was that of a rock concert simultaneously chaotic and peaceful. Everyone was talking about health care, rationing, economies, and other such topics that six months prior did not occupy the public square. Everyone had an opinion and few were afraid to argue. I listened as people debated the meaning of "rationing" or whether providing "health care for everyone" was tenable or desirable. They were all highly motivated. Interestingly, at least 70% of the assembled were there in opposition to "ObamaCare." While I cannot say that everything that I heard was intelligent, I can say that the assembled, those excluded from their senator's speech, cared about their country, were concerned about the actions of their representatives in Washington, and strongly desired to manipulate the development of this social/political issue.

What explains this populist uprising? Further, when did health care policy become so exciting? Certainly much of the protest revolved around economic policy. People were concerned that excessive spending would harm the future economic and political stability of the country. But that objection, which is present every time government proposes the enactment of an expensive project, appears to be secondary. The primary objection, evidenced by the language of the American Spectator and the rhetoric used by the protestors standing outside town hall meetings across the country, was one grounded in liberty. Virtually nowhere is a violation of personal autonomy more closely felt than in depriving the individual the right to make personal health care decisions. It appeared that the people were not willing to surrender their liberty interests in choosing a course of treatment for themselves and their families. Most of them did not seem to object to health care delivery reform per se, just in a type of reform that limited their ability to make decisions regarding personal and familial health. If so, meaningful and comprehensive health care reform that adequately assures the public that it will have some degree of control over the results of health care allocation decisions might be politically feasible. Regardless, health reform efforts that do not adequately assuage public concerns have become a legal and political quagmire. (9)

Health care reform efforts are complicated by the absence of simple solutions. If it were possible to place physicians or patients in charge of allocating scarce medical resources, the problems of medical allocation could be addressed more easily. For example, rather than developing complex systems to promote the proper consumption of medical resources, governments could simply grant groups of physicians access to a certain quantity of resources and ask them to allocate resources appropriately and efficiently. Unfortunately, the realities of health care economics preclude simple solutions. Physicians, for example, must navigate a complex network of conflicting interests, many of which are at odds with society's interest in efficient resource allocation. They include the need to avoid medical malpractice liability; the need to satisfy repayment requirements, such as requirements imposed by private insurance companies and government programs; and other overt and discrete financial incentives that promote consumption, including direct compensation for services rendered (10) and kickbacks from pharmaceutical representatives for product promotion. (11) Nor can patient groups be expected to efficiently allocate resources. Patients, as a class, lack the information necessary to evaluate the full breadth of their options, the expected effectiveness of any given treatment, the total social costs (12) associated with their treatment options, the efficacy of their providers, or the relative quality of their results. They must rely upon their physicians to make allocational decisions for them, and are thus subject to all of the biases that physicians face. Nor can health insurance contracts efficiently allocate resources by actualizing individual preferences. Contracts are often negotiated by a third-party, typically an employer under the current American model, (13) who then passes that contract (often unilaterally) (14) to the consumer. (15) The long-term interests of employers are necessarily different from the interests of employees, (16) thus calling into question whether a contract negotiated by an employer, even if formally adopted by the employee, can be expected to represent the employee's interests.

Notwithstanding the absence of simple solutions to health reform due to numerous conflicting incentives and the political quagmire that permeates health care rationing, it remains necessary to impose comprehensive limitations on health care access. The government has the tools necessary to ration (17) care and has no choice but to do so or to pass that responsibility to the private sector. It is impossible for any government to finance care commensurate with its demand because the potential demand (the desire) for medical care is virtually boundless despite external constraints such as the inability of many consumers to pay. (18) The two simplest methods of limiting access are to (1) appropriate a certain fixed percentage or amount of the annum budget for health care spending and place no other limits upon consumption, (19) or (2) adopt a completely unregulated market in which price constraints are the exclusive limiting factor. To my knowledge, neither option has been adopted in modern health care delivery systems. In the former case, it would be bizarre to allocate resources completely without regard to the needs of the patient being granted or denied those resources. In the latter case, price would likely spiral out of control, which would create severe negative distributional effects and would cripple the host economy. (20) A third, relatively simple, alternative would be to ration care without the knowledge of the patient via ad hoc rationing. (21) While some physicians currently engage in ad hoc rationing on a case-by-case basis, it appears to be logistically impossible to institutionalize ad hoc rationing and expand it so that it independently solves the problem of excessive consumption. For the remainder of this paper, the term "rationing" refers to purely institutional, rather than to ad hoc rationing. Thus, for the purpose of this paper, it is assumed that when a patient is denied access to health care, she has full knowledge of the general reasons for her denial.

If government fails to satisfactorily ration care in light of virtually boundless demand, private insurers will have to ration by creating incentives to limit consumption. If they fail to do so, they will cease to exist. As the Supreme Court famously remarked in 2000, no managed care organization can survive without rationing tactics because "[t]he essence of [managed care] is that salaries and profits are limited by the [managed care organization's] fixed membership fees." (22) The problem of fixed revenue renders fatal the failure to effectively address limitless demand. Indeed, "inducement to ration care goes to the very point of any [managed care] scheme." (23) Accordingly, managed care organizations enter relationships with physicians that incentivize the physician to limit the treatment he provides to his patients. (24) The need for providers (government and private insurance) to ration care and the desire for patients to consume care create an irresolvable tension that lies at the heart of rising costs and skyrocketing prices. The objective of this paper is to address that tension.

In his landmark 1994 work, Einer Elhauge described four conceptual paradigms that are intended to provide the universe of possible theoretical approaches (25) to ration health care resources as a means of controlling costs: the market, (26) professional, (27) political, (28) and moral paradigms. (29) He defines the "moral paradigm" negatively: "What unites the various positions [that together constitute the moral paradigm] is not their uniformity but their insistence that allocation decisions should be derived from moral analysis, rather than dictated by market forces, professional judgment, or political accountability." (30) As his language implies, he adopted this negative definition as a means of synthesizing many various positions that on the surface have nothing in common other than the negation of the other three paradigms, a In truth, the various positions of the moral paradigm have a great deal in common. They all adopt moral reasoning as a tool for rationing health care and generally assume that the adoption of moral reasoning is not merely good policy, but that it is an imperative. Elhauge's conception is thus far too narrow. By reconceptualizing the moral paradigm as an imperative, rather than as a distinct philosophical approach to rationing, this paper articulates a new application ofthe moral paradigm that might help resolve the problem of rationing medical care.

This paper argues that the moral paradigm is both useful to the creation of good public policy and necessary to the extent we desire a solution that is politically salable. Essentially, it argues that the moral paradigm demands greater process for those who are denied access to medical care and that we design our institutions responsible for rationing to incorporate this call for greater process. The moral paradigm thus need not provide a substantive approach to rationing, such as by negating "non-moral" approaches. It serves merely to complement various approaches to rationing by incorporating a system of administrative adjudication into the rationing process.

Part II of this paper will introduce three principal methods of rationing (distinct from Elhauge's philosophical paradigms) and will illustrate the problems with each of them. Part III will further develop the moral paradigm, articulate my reconceptualized pluralist version of the moral paradigm (the "new moral paradigm"), and articulate a moral argument for inserting a process-based element into rationing. Part IV will propose the creation of an administrative adjudicatory board that grows directly out of the process argument. The objective is to use the moral paradigm as an overlay on any rationing scheme. The adjudicatory board can oversee health care delivery and rationing efforts to deal with the problems of scarcity and unquenchable demand in a manner consistent with the new moral paradigm. In particular, Part IV will articulate the need for discretionary individualized decisionmaking rather than the adoption of universal bright-line rules as an answer to the rising price of heath care. Part V will consider the structure and function of the administrative adjudicatory body proposed in this paper--suggesting some of the powers that ought to be granted to adjudicators and the structural limits that ought to be placed upon the adjudicatory process--in order to ensure efficacy and reduce the risks of abuse of power.

II. THE PROBLEM OF RATIONING

Richard Lamm summarizes the argument for the necessity and inevitability of rationing: "[W]hile our resources as a nation are finite, our health demands are infinite." (32) Governments and commentators have developed a number of rationing schema in response to this necessity and inevitability. This Part deseribes the three idealized mechanisms of rationing health care that together describe nearly every rationing scheme and articulates some of the normative or ethical problems occasioned by each of them.

Lamm identified four "basic methods of rationing": rationing by (1) price, (2) quantity, (3) chance, and (4) prioritization. (33) In lay parlance, "rationing" means "rationing by prioritization," which is a rigorous scheme in which health care decisions are set forth by way of precommitment. (34) For example, HHS has published a proposed distribution of scarce vaccine following the onset of pandemic influenza that delineates various "priority groups" to sequence vaccine distribution. (35) This sequencing is rationing by prioritization, which is just one of the three major forms of rationing. (I will not deal explicitly with rationing by chance for its only practical application is in the strong version of the moral paradigm, discussed below.) (36) The next Section describes these three approaches to rationing.

A. THREE APPROACHES TO RATIONING

1. Rationing by Price

Rationing in the United States is accomplished primarily by pricey Market-based systems, defined generally, allocate resources to those who are most willing to pay for them. In so doing, those who are unable to pay are priced-out of the market; they are denied access to the goods they desire. Markets create an effective means of rationing medical care by excluding certain people from the marketplace, thus limiting consumption against the will of the consumer. This is rationing by price.

The millions of Americans without health insurance and without sufficient funds to cover the costs of their care are subject to price rationing. (38) The millions of Americans who live in rural areas with insufficient access to specialists and resources necessary to travel long distances to get the care they need also suffer from price rationing. (39) Additionally, a surprisingly large number of people subject to price rationing fit in neither of those categories. An interesting study published in 2004 found that 3.2% of respondents with income over 400% of the federal poverty level reported postponing needed medical care or entirely declining to seek care due to cost concerns within the twelve months prior to the survey. (40) A similar study demonstrated that 5.1% of responding patients with an annual income over $70,000 refrained from the consumption of recommended health care due to cost. (41) These data suggest that price rationing imposes significant burdens on a large number of middleclass Americans. (42) Indeed, "[i]n the United States, 61% of adults with health insurance currently report difficulty paying their medical bills" and "29% of adults, or someone in their household, avoided medical treatment, cut pills, or did not fill a prescription in the [year prior to the survey] because of cost." (43)

Not only is the number of affected middle-class Americans large, it is growing. The Commonwealth Fund revealed that, from 2001 to 2007, the number of people reporting a decision not to go to a doctor, or to skip a recommended medical test, or to fail to see a specialist when needed, or to fail to fill a prescription despite knowledge of a medical problem rose from 29% to 45% for the entire population; from 21% to 35% for the population insured the entire twelve months prior to the survey; and from 14% to 29% among those with an annual income over $60,000. (44) With the onset of severe global recession in late 2008, we can expect the figures in Commonwealth Fund's 2009 survey (which will likely be released in 2010) to continue their upward trend. (45)

2. Rationing by Quantity

Lamm suggested that rationing by quantity (setting limits on access to certain high-cost care by artificially limiting the quantity of that care available for consumption) might be conceptualized as "last-dollar rationing" as opposed to rationing by price, which is "first-dollar rationing." (46) First-dollar rationing programs prevent access to initial treatment while last-dollar rationing programs focus on limiting access over time. If the objective of rationing is to maximize public health, controlling total expenditures is more congruous with that objective than is excluding a class of individuals from coverage entirely (provided that the disfavored class is not statistically less likely to recover or otherwise a less desirable class to treat for reasons of health policy). Rationing by price grants the wealthy access to procedures that promise little marginal benefit relative to the cost of treatment and excludes the poor from low-cost high-value procedures that undeniably improve both public and individual health. In stark contrast, rationing by quantity favors procedures that maximize public health relative to their costs. (47)

In theory, limits on quantity need not be tied to assessments on cost effectiveness. The government could ration by setting very bright lines for total consumption without involving itself in the details. For example, health care consumption could be fixed at 10% of GDP without additional limitation. Under such a scheme, people who get sick in the beginning of a fiscal year will be favored over those who get sick in the end of a fiscal year for no other reason than getting sick at the wrong time. Rationing by quantity, performed so crudely, is clearly irrational. Once the budget for health care consumption is fixed, it becomes necessary to inquire how the fixed dollars ought to be spent. Accordingly, rationing by quantity is linked to, and generally preceded by, assessments on cost effectiveness.

The federal government's decision in early 2009 to appropriate $1.1 billion for cost effectiveness research and to develop an advisory council designated to issue reports on cost effective medicine might be the first step towards the adoption of a rationing by quantity scheme in the United States. (48)

Rationing by quantity need not be centralized. For example, private insurance contracts impose some form of rationing by quantity. (49) They limit access to certain types of treatments on the theory that the costs of treatment exceed the likely benefits, and thus the beneficiary would not be willing to pay the increased premium for the additional benefit (a theory of consent). Even if we assume that this contractual relationship is truly consensual, (50) that does not imply that rationing is not taking place. The two parties are agreeing ex ante to ration care by limiting access to certain types of treatment (and thus quantity) should the beneficiary ever desire that type of treatment in the future.

The fact that insurance contracts and centralized rationing systems often completely exclude certain types of treatment does not render them any less vehicles of rationing by quantity. In these cases, the frequency of consumption is reduced from 100% down to 0% (a very blunt method of quantity reduction). The phrase "rationing by quantity" is valuable because it tolerates more subtle approaches to quantity limitations, such as limiting access to physical therapy or mental health treatment to a certain number of visits per year. It also incorporates a broader view of health policy. Even where a particular person is completely denied access to health care, describing that exclusion as a limitation on quantity is valuable because it focuses on national and global health care consumption rather than the narrow implications for just one patient.

3. Rationing by Prioritization

Finally, rationing by prioritization attempts to rank patients for treatment according to need or some other rubric, rather than by limiting quantity. Rationing by prioritization and rationing by quantity are closely related but different. Rationing by quantity focuses primarily on limiting access to certain types of treatment while rationing by prioritization focuses primarily on limiting access for certain types of people. If those people are defined by their medical condition (AIDS patients, for example) the line between rationing by prioritization and rationing by quantity is blurred. There is little functional difference between denying all treatment for AIDS patients (rationing by prioritization) and denying access to AIDS medication (rationing by quantity). The two are nevertheless analytically distinct, deserve separate analysis, and present different problems. (51)

Prioritization methods aim to provide medical care to particular patients rather than others on the theory that doing so will maximize public health or the ends of some other policy objective. An obvious and uncontroversial example of prioritization is the vaccination of soldiers, even at great expense and with a vaccine not available to the civilian public, before deploying them in an area of the world that has a high concentration of a particular contagion. These solders are placed at risk of significant harm for reasons largely beyond their control, thus providing a moral basis for prioritization. Vaccination is also appropriate on utilitarian grounds because soldiers who are not vaccinated provide a much shorter expected service to their country than do soldiers who are vaccinated. Accordingly, vaccinating these soldiers is likely to provide great societal gains per unit of investment as compared with a similar vaccination of the civilian population. (52)

The term "triage" is today most commonly associated with efforts by hospitals to queue emergency room patients for treatment. It is generally uncontroversial because it provides a rule of priority rather than a rule of exclusion, except where the patient has no reasonable hope of recovery. (53) In contrast, the "rationing by prioritization" envisioned by this paper is a prioritization for the purpose of exclusion, and is thus far more controversial.

Using prioritization as a rule of exclusion is not analytically simple and the proper construction of such a prioritization scheme is not obvious. The problem is exacerbated because the methods available to policy-makers are nearly infinite. Here are a few potential viable examples, in no particular order: (1) utility (providing access in a manner designed to increase aggregate utility); (2) public health (providing access in a manner designed to increase aggregate public health (which is not necessarily coextensive with utility)); (3) nationality; (4) global productivity (particularly where extended illness or death is likely, we could provide treatment to those who are likely to be most productive--typically teenagers and young adults--after the emergency has past); (5) temporal priority ("first-come, first-served"; awarding resources to those who make themselves available soonest presumably either on the assumption that they are the most enthusiastic about treatment or as a means of adopting chance as the prioritizing factor); (6) enthusiasm (perhaps as evidenced by willingness to pay or to labor for the resources); (7) guilt or responsibility (disfavoring those who engage in dangerous behavior (e.g. smoking) on the theory that they will continue to impose health care costs on society after recovery); (8) age (prioritize the young on the theory that they have more to lose).

In light of the stunning variety of approaches to prioritization, this method of rationing is very difficult to characterize. Because the various methods of prioritization can be combined or graduated, prioritization is an extremely broad tool. In general, prioritization schemes all share a willingness to address consumption by appeal to some stated standard or policy objective.

B. RATIONING BY PRICE

Rationing by price, (54) the use of market systems to ration medical care, is endemic to the health sector and represents very poor health policy. Considerable data demonstrates that the lack of sufficient medical insurance yields reduced health care consumption, even where consumption is socially desirable and where non-consumption produces significantly poorer results. (55)

Many commentators attempt to prove that the price rationing system prevalent in the United States is deficient by appealing to rather surprising statistics (for example, life expectancy in the United States, seventy-eight years, ranks just forty-fifth in the world and U.S. infant mortality rate is more than double that of Singapore, Sweden, and Japan). (56) These statistics prove little because simple statistical comparisons do not properly consider conflating factors. For example, a low life expectancy in the United States might be due more to a high homicide rate, poor nutrition, or a sedentary culture, than to ineffective health care.

Rather, data from empirical experiments--carefully designed to demonstrate such deficiency, and structured to avoid the articulation of false positive results--is necessary to support the claim that forced or coerced reductions in consumption of health care produce undesirable results. The empirical literature on the subject is broad and cannot be briefly summarized. (57) Instead, I provide below brief summaries of two empirical studies that I find particularly persuasive. (58)

One interesting empirical study inquired whether the existence of a $1000 cap on prescription drug benefits for certain sixty-five-or-older Medicare beneficiaries was closely correlated with differential outcomes between those patients and similarly situated patients whose prescription drug benefits were complemented by their former employers (that is, the second class was subject to no limitation as a result of the $1000 cap). (59) Researchers found that those subject to the cap suffered relative to the other group; (60) the patients who had to pay for their own prescription drugs suffered from an increased death rate of about seven per 1000 people each year. (61) Importantly, the research suggested that the cap actually created a net cost, rather than a net savings. (62) Another study demonstrated that among patients who experience a dramatic change in their health status (due to severe trauma, for example), the uninsured patients performed significantly worse than those with insurance shortly after their dramatic change in health status. …

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