Rationing Healthcare
College 1.1 – introduction to the course
Learning goals: Introduction to the course
After lecture 1.1. you will know:
1. The focus of the course.
2. The structure of the course.
3. The topics to be discussed.
4. The lecturers
5. What to do in case of questions.
Focus of the course
- Topic of rationing health care, mainly from economic perspective
- Supply side rationing – limiting supply e.g., by restricting budgets
and waiting lists
- Demand side rationing – limiting demand e.g., by co-payments and
demarcation of the basic benefits package
- Principles, practices (in NL and beyond), and consequences
1.2 College – introduction to rationing health care
Rationing health care
• Perhaps the most difficult topic of them all
• Rationing - somehow limiting the amount of care provided and consumed often in order to
control / optimize healthcare expenditures.
• “Rationing takes place when an individual is deprived of care which is of benefit (in terms of
improving health status, or the length and quality of life) and which is desired by the patient.”
(Maynard, 1999)
• Later shortened: To limit the beneficial health care an individual desires by any means – price or
non-price, direct or indirect, explicit orimplicit (Breyer, 2013)
• Universal theme, relevant across the world
• Level and intensity of rationing differs given levels of health care spending.
Rationing wordt in elk land in elk gezondheidszorg gedaan, wordt alleen vaak anders genoemd, zoals
goals.
Rationing?
• As Alan Maynard (1999) noted: rationing evokes images of war or crisis in which the limited
supply of essentials was distributed ... in relation to ownership of and willingness to trade a
‘coupon’ or certificate of ‘right’ to access the market.
• Might we be exaggerating the problem of rationing in health care?
Het word rationing wordt vaak gelinkt aan het negatieve woord in crisis etc.
Spending % GDP (OECD, 2019) -> zorguitgaven in thermen van onze totale inkomsten blijft steeds meer
stijgen. Gezondheidszorg blijft steeds meer geld uitgeven.
Plaatje van slide 6
Life expectancy -> Health en life expectancy stijgt. We worden veel ouder en zijn veel gezonder.
What’s the problem? ->>
But still WWW: World Wide Worries
, • In some countries, people suffer or die while waiting for appropriate care
• In some countries, substantial copayments are charged to patients, leading to discussions of
accessibility of care
• In some countries, certain types of care are not covered under collectively financed health
insurance (basic benefits package) – financial access limited
• In the US millions of people are uninsured
• In New Zealand, for a while, a guideline on end stage renal dialysis, indicated people over 75
were normally not eligible for treatment -> mensen vonden het niet redelijk, want als je zegt
dus eigenlijk we proberen je te behandelen zo goed als we kunnen, maar je zal dood gaan na
een bepaalde periode.
• For many people in low income countries, essential medicines are unaffordable
• People waiting for surgery wait longer due to COVID patients
Imagine…
• Imagine being in much pain, having difficulties walking and performing usual activities. After
waiting for a diagnosis (for 3 months) the operation you need is scheduled... for over 5
months...
• Imagine you have a rare disease, causing your muscles to deteriorate. A new drug has come on
the market (costing $200,000 per patient per year). Your government decides not to reimburse
it...
• Imagine living on a very tight budget. The washing machine just broke down. Your GP says you
should have an x-ray (for which you pay 385 euros out of pocket).
-> Mensen in Nederland moeten echt deze keuzes maken. Kunnen we mensen deze keuze laten maken?
Culturele verschillen: Nederlanders zijn direct en zullen zeggen wat we denken. In Nederland kunnen
we debatten hebben over rationing, wat in andere landen misschien niet gebeurt. De benadering tussen
keuzes in de gezondheidszorg en openheid waarin dit kan worden besproken verschilt. Rol van de
overheid of solidariteit verschilt weer per cultuur.
Sommige landen willen niet dat overheden private keuzes maken -> socialised medicine is een negatief
in dat soort landen.
In Nederland wel verplicht, omdat dat onze enige manier lijkt om solidariteit te creëren, terwijl dit in
Amerika bijvoorbeeld niet normaal is. Normen en waarden en plek waar je bent opgegroeid heeft
invloed over deze ideeën.
-> maar ook in NL ontstaan er problemen door de solidariteit. Als er nee wordt gezegd, is de reactie vaak
dat dingen nog vaak gedekt moeten worden.
Resistance
• People typically do not like rationing: even the ‘R word’ is often avoided
• Some think rationing can be avoided but economists might say that there are always limits to
what we can do
• This is more difficult in the context of health care: because of nature of health and health care
and the way health care systems are financed
• The difficulty comes in deciding how to limit health care, on what basis, in general and in
individual cases, and how to make it work in practice.
Rationing from an economic perspective
Rationing from an economic perspective…
John Kenneth Galbraith: economics is extremely useful as a form of employment for economist.
,Oscar Wilde (cynic): An economist knows the price of everything but the value of nothing.
Economics
• Economics concerned with the efficient allocation of scarce resources over alternative uses and
the equity implications.
• Efficiency relates to maximizing of welfare (happiness)
• Equity relates to notions of fair distributions (of welfare)
• Equity and efficiency issues cannot be solved independently (Arrow, 1963)
• Both very important when it comes to health and health care
Dismal science
• Core assumptions: desires/needs are infinite, yet resources are limited
• Scarcity - never enough resources to satisfy all human wants and needs
• Available resources used to maximize outcomes/goal (e.g. happiness, welfare, health)
• In decisions with effects across people, equity plays a role as well
• Rationing at core of economics - a dismal science?
• Rationing is inevitable due to scarcity
So
• For economists the fact that we need to ration is unsurprising
• We always need to ration in all sectors of public and private life
• There are never enough resources to fulfil all our wishes and needs
• Normally, preferences, prices and budget restrictions determine outcomes
• Individuals maximize utility and make own choices about own consumption and take income
and prices as given.
• Utility is gained by buying and consuming goods at a price at or below what they are willing to
pay from profit-maximizing firms without market power selling at a price they are willing to
accept (equal to marginal costs).
‘Perfect market’: many buyers and many suppliers
Optimality
• Markets steer, through price mechanism, towards an equilibrium
• Equilibrium equals supply and demand
, • Under a number of (strict) assumptions, such an equilibrium can be seen as optimal (i.e. welfare
maximizing, Pareto optimal)
• Individuals maximize own utility, are best judges of own welfare, have perfect knowledge about
prices and characteristics of all available goods
• Income distribution is not questioned and determines purchasing power.
Health care is different…
• The assumptions underlying economic textbooks are not valid for health care
• Many deviating characteristics cause that leaving health care provision to market forces will not
lead to optimal outcomes
• That implies that government intervention in the health care sector may be necessary to attain
“better” results
• This holds both for reasons of efficiency and for reasons of equity
Health care is different
• Markets do not result in optimal (efficient) outcomes in health care due to specific
characteristics (See Arrow, 1963)
1. Uncertainty and consequences of insurance
2. Information asymmetry between consumers and suppliers
3. Existence of externalities (als ik een vaccinatie neem, heeft het ook effect op een ander), als
we allemaal deden wat voor ons het beste is, dan zal de uitkomst niet optimaal zijn, dus de
overheid grijpt hierbij in om dit te voorkomen.
• Moreover, strong concerns for equity in relation to health can make efficient outcomes
unacceptable (i.e. inequitable).
Rationing
Breyer (2013) distinguishes general economic rationing and the type central in this course:
“These methods can be divided into those that make use of the price mechanism (“price rationing”) and
those that do not (“non-price rationing”), the latter being synonymous with rationing in its narrow sense.
More specifically, this latter concept can be defined as the allocation of limited amounts below market
price, which often means “free of charge”.”
Rationing in this course thus often presupposes (the possibility of) some kind of collective financing of
the good in question, but can still result in types of rationing that leave allocation to market (e.g. no
coverage).
-> gaat niet over individuele beslissingen, maar over het collectief, hoe gaan we die keuzes maken?
Allocation and rationing
• Individual markets people “ration own consumption”
• In government regulated markets without (full) price mechanisms, also decisions regarding
allocations / priority setting / rationing need to be made somehow
• I may not be able to afford a drug that costs $300,000 and would give me some additional
health, but a collectively financed system could still enable me to get it (for free or e.g. a
copayment of $3,000)
• How to we now determine which care should be available for specific groups (and when and
under which circumstances)?
• Or should there be no limit?
The great escape: ethics
College 1.1 – introduction to the course
Learning goals: Introduction to the course
After lecture 1.1. you will know:
1. The focus of the course.
2. The structure of the course.
3. The topics to be discussed.
4. The lecturers
5. What to do in case of questions.
Focus of the course
- Topic of rationing health care, mainly from economic perspective
- Supply side rationing – limiting supply e.g., by restricting budgets
and waiting lists
- Demand side rationing – limiting demand e.g., by co-payments and
demarcation of the basic benefits package
- Principles, practices (in NL and beyond), and consequences
1.2 College – introduction to rationing health care
Rationing health care
• Perhaps the most difficult topic of them all
• Rationing - somehow limiting the amount of care provided and consumed often in order to
control / optimize healthcare expenditures.
• “Rationing takes place when an individual is deprived of care which is of benefit (in terms of
improving health status, or the length and quality of life) and which is desired by the patient.”
(Maynard, 1999)
• Later shortened: To limit the beneficial health care an individual desires by any means – price or
non-price, direct or indirect, explicit orimplicit (Breyer, 2013)
• Universal theme, relevant across the world
• Level and intensity of rationing differs given levels of health care spending.
Rationing wordt in elk land in elk gezondheidszorg gedaan, wordt alleen vaak anders genoemd, zoals
goals.
Rationing?
• As Alan Maynard (1999) noted: rationing evokes images of war or crisis in which the limited
supply of essentials was distributed ... in relation to ownership of and willingness to trade a
‘coupon’ or certificate of ‘right’ to access the market.
• Might we be exaggerating the problem of rationing in health care?
Het word rationing wordt vaak gelinkt aan het negatieve woord in crisis etc.
Spending % GDP (OECD, 2019) -> zorguitgaven in thermen van onze totale inkomsten blijft steeds meer
stijgen. Gezondheidszorg blijft steeds meer geld uitgeven.
Plaatje van slide 6
Life expectancy -> Health en life expectancy stijgt. We worden veel ouder en zijn veel gezonder.
What’s the problem? ->>
But still WWW: World Wide Worries
, • In some countries, people suffer or die while waiting for appropriate care
• In some countries, substantial copayments are charged to patients, leading to discussions of
accessibility of care
• In some countries, certain types of care are not covered under collectively financed health
insurance (basic benefits package) – financial access limited
• In the US millions of people are uninsured
• In New Zealand, for a while, a guideline on end stage renal dialysis, indicated people over 75
were normally not eligible for treatment -> mensen vonden het niet redelijk, want als je zegt
dus eigenlijk we proberen je te behandelen zo goed als we kunnen, maar je zal dood gaan na
een bepaalde periode.
• For many people in low income countries, essential medicines are unaffordable
• People waiting for surgery wait longer due to COVID patients
Imagine…
• Imagine being in much pain, having difficulties walking and performing usual activities. After
waiting for a diagnosis (for 3 months) the operation you need is scheduled... for over 5
months...
• Imagine you have a rare disease, causing your muscles to deteriorate. A new drug has come on
the market (costing $200,000 per patient per year). Your government decides not to reimburse
it...
• Imagine living on a very tight budget. The washing machine just broke down. Your GP says you
should have an x-ray (for which you pay 385 euros out of pocket).
-> Mensen in Nederland moeten echt deze keuzes maken. Kunnen we mensen deze keuze laten maken?
Culturele verschillen: Nederlanders zijn direct en zullen zeggen wat we denken. In Nederland kunnen
we debatten hebben over rationing, wat in andere landen misschien niet gebeurt. De benadering tussen
keuzes in de gezondheidszorg en openheid waarin dit kan worden besproken verschilt. Rol van de
overheid of solidariteit verschilt weer per cultuur.
Sommige landen willen niet dat overheden private keuzes maken -> socialised medicine is een negatief
in dat soort landen.
In Nederland wel verplicht, omdat dat onze enige manier lijkt om solidariteit te creëren, terwijl dit in
Amerika bijvoorbeeld niet normaal is. Normen en waarden en plek waar je bent opgegroeid heeft
invloed over deze ideeën.
-> maar ook in NL ontstaan er problemen door de solidariteit. Als er nee wordt gezegd, is de reactie vaak
dat dingen nog vaak gedekt moeten worden.
Resistance
• People typically do not like rationing: even the ‘R word’ is often avoided
• Some think rationing can be avoided but economists might say that there are always limits to
what we can do
• This is more difficult in the context of health care: because of nature of health and health care
and the way health care systems are financed
• The difficulty comes in deciding how to limit health care, on what basis, in general and in
individual cases, and how to make it work in practice.
Rationing from an economic perspective
Rationing from an economic perspective…
John Kenneth Galbraith: economics is extremely useful as a form of employment for economist.
,Oscar Wilde (cynic): An economist knows the price of everything but the value of nothing.
Economics
• Economics concerned with the efficient allocation of scarce resources over alternative uses and
the equity implications.
• Efficiency relates to maximizing of welfare (happiness)
• Equity relates to notions of fair distributions (of welfare)
• Equity and efficiency issues cannot be solved independently (Arrow, 1963)
• Both very important when it comes to health and health care
Dismal science
• Core assumptions: desires/needs are infinite, yet resources are limited
• Scarcity - never enough resources to satisfy all human wants and needs
• Available resources used to maximize outcomes/goal (e.g. happiness, welfare, health)
• In decisions with effects across people, equity plays a role as well
• Rationing at core of economics - a dismal science?
• Rationing is inevitable due to scarcity
So
• For economists the fact that we need to ration is unsurprising
• We always need to ration in all sectors of public and private life
• There are never enough resources to fulfil all our wishes and needs
• Normally, preferences, prices and budget restrictions determine outcomes
• Individuals maximize utility and make own choices about own consumption and take income
and prices as given.
• Utility is gained by buying and consuming goods at a price at or below what they are willing to
pay from profit-maximizing firms without market power selling at a price they are willing to
accept (equal to marginal costs).
‘Perfect market’: many buyers and many suppliers
Optimality
• Markets steer, through price mechanism, towards an equilibrium
• Equilibrium equals supply and demand
, • Under a number of (strict) assumptions, such an equilibrium can be seen as optimal (i.e. welfare
maximizing, Pareto optimal)
• Individuals maximize own utility, are best judges of own welfare, have perfect knowledge about
prices and characteristics of all available goods
• Income distribution is not questioned and determines purchasing power.
Health care is different…
• The assumptions underlying economic textbooks are not valid for health care
• Many deviating characteristics cause that leaving health care provision to market forces will not
lead to optimal outcomes
• That implies that government intervention in the health care sector may be necessary to attain
“better” results
• This holds both for reasons of efficiency and for reasons of equity
Health care is different
• Markets do not result in optimal (efficient) outcomes in health care due to specific
characteristics (See Arrow, 1963)
1. Uncertainty and consequences of insurance
2. Information asymmetry between consumers and suppliers
3. Existence of externalities (als ik een vaccinatie neem, heeft het ook effect op een ander), als
we allemaal deden wat voor ons het beste is, dan zal de uitkomst niet optimaal zijn, dus de
overheid grijpt hierbij in om dit te voorkomen.
• Moreover, strong concerns for equity in relation to health can make efficient outcomes
unacceptable (i.e. inequitable).
Rationing
Breyer (2013) distinguishes general economic rationing and the type central in this course:
“These methods can be divided into those that make use of the price mechanism (“price rationing”) and
those that do not (“non-price rationing”), the latter being synonymous with rationing in its narrow sense.
More specifically, this latter concept can be defined as the allocation of limited amounts below market
price, which often means “free of charge”.”
Rationing in this course thus often presupposes (the possibility of) some kind of collective financing of
the good in question, but can still result in types of rationing that leave allocation to market (e.g. no
coverage).
-> gaat niet over individuele beslissingen, maar over het collectief, hoe gaan we die keuzes maken?
Allocation and rationing
• Individual markets people “ration own consumption”
• In government regulated markets without (full) price mechanisms, also decisions regarding
allocations / priority setting / rationing need to be made somehow
• I may not be able to afford a drug that costs $300,000 and would give me some additional
health, but a collectively financed system could still enable me to get it (for free or e.g. a
copayment of $3,000)
• How to we now determine which care should be available for specific groups (and when and
under which circumstances)?
• Or should there be no limit?
The great escape: ethics
