A Question of Rationing
Michael Hiltzik has a smart column explaining the way rationing works in the British health-care system:
The most extensive laboratory in the field has been run by the National Institute for Health and Clinical Effectiveness, or NICE, an arm of Britain's National Health Service, the government healthcare program.
NICE's judgments about cost-effectiveness are based on a measure known as the quality-adjusted life year, or QALY. Get used to the acronym -- you're sure to hear it a lot more as the health-reform debate rages on.
In simple terms, QALY adjusts the length of time that a treatment might extend a patient's life by a factor assessing the patient's quality of life in that time ranging from 0 (death) to 1 (complete health). If a certain cancer drug would extend life by two years, say, but with such onerous side effects that those years were judged to be only half as worth living as those of a healthy person, the QALY is 1.
That's not very objectionable, as far as it goes. But the clinical effectiveness institute judges new drugs and treatments by their cost per QALY; the institute almost always approves those that cost less than 20,000 pounds per QALY (about $33,000), and except in rare cases rejects those costing more than 30,000 pounds (about $50,000).
The big problem with Britain is that there's nothing outside the National Health Service. If you want to pay for care out of your own pocket, you have to give up your state-based coverage.
There's no reason we have to copy that example. But imagine a system in which the government offered basic coverage to all Americans, regardless of age or income, for all treatments that are less than $33,000 per QALY. Above that, the government could offer subsidies for low-income Americans to purchase supplementary coverage, and higher-income folks would have to figure it out on their own.
That's not rationing, incidentally. It's simply setting limits on what comes out of the public purse. And it would have a few advantages over both the current system and most potential alternatives. First, it would create a larger market for lower-cost care. Companies would have more of an incentive to develop affordable treatments because what they'd lose on each individual sale they might make up on volume. Second, it would ensure that all Americans have access to the basic, cheap interventions that are the most important for long-term health. Third, it would preserve a place in the system for innovation but wouldn't bankrupt the government by making an implicit promise to pay for every single treatment that emerged. Indeed, this is basically what the French do, and many people think their health-care system is the best in the world.
Photo credit: AP Photo/Susan Walsh
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